The balance sheet of Snapshot, Inc., a distributor of photographic supplies, as

Question

The balance sheet of Snapshot, Inc., a distributor of photographic supplies, as of May 31 is given below:

Sales are budgeted at $280,000 for June. Of these sales, $60,000 will be for cash; the remainder will be credit sales. One-half of a month’s credit sales are collected in the month the sales are made, and the remainder is collected the following month. All of the May 31 accounts receivable will be collected in June.

Purchases of inventory are expected to total $170,000 during June. These purchases will all be on account. Forty percent of all inventory purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the May 31 accounts payable to suppliers will be paid during June.

Selling and administrative expenses for June are budgeted at $54,000 , exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,300 for the month.

The note payable on the May 31 balance sheet will be paid during June. The company’s interest expense for June (on all borrowing) will be $600 , which will be paid in cash.

During June, the company will borrow $21,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.

Prepare schedule of expected cash collections from sales and a schedule of expected cash disbursements for inventory purchases.

        

       

Prepare a cash budget for June.

     

      

       

The balance sheet of Snapshot, Inc., a distributor of photographic supplies, as of May 31 is given below:

Explanation / Answer

1a. Schedule of expected cash collections:

Schedule of Expected Cash Disbursements:

1b. Snapshot Inc.

Cash Budget

For the month ended June 30

2. Snapshot Inc.

Budgeted Income Statement

For the month ended June 30

3. Snapshot Inc.

Budgeted Balance Sheet

June 30

$ Cash Sales 60,000 Collection of Sales of Current Month 110,000 Collection of Sales of Previous Month 75,000 Total 245,000

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