?g Exercise 20-24A Merchandising Preparation of a cash budget Use the following

Question

?g Exercise 20-24A Merchandising Preparation of a cash budget Use the following information to prepare the July cash budget for Acco Co. It should show expected cash receipts and cash disbursements for the month and the cash balance expected on July 31 a. Beginning cash balance on July 1: $50,000. b. Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,720,000; June (actual), $1,200,000; and July (budgeted), $1,400,000. c. Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. Purchases amounts are: June (actual), $700,000; and July (budgeted), $750,000. d. Budgeted cash disbursements for salaries in July: $275,000. e. Budgeted depreciation expense for July: $36,000. f. Other cash expenses budgeted for July: $200,000. g. Accrued income taxes due in July: $80,000. h. Bank loan interest paid in July: $6,600. Check Ending cash balance, S$122,400 ?10

Explanation / Answer

Cash Budget July beginning Cash Balance $50,000 Cash receipts from sales 1364000 Total Cash available C $1,414,000 Cash Disbursement Payment for mercandise 730000 Salaries 275000 Other expenses 200000 Accured Taxes 80000 interest on Bank loan 6600 total cash Disbursement D 1291600 Ending Balance C-D $122,400 working Cash receipts from sales 1364000 (1400000*30%)+(1200000*50%)+(1720000*20%) Payment for mercandise 730000 (750000*60%)+(700000*40%) If any doubt please comment. If satisfied you can rate the answer

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