Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

E9-31. Cash Disbursements Assume that Ringwood Manufacturing manages its cash fl

ID: 2566925 • Letter: E

Question

E9-31. Cash Disbursements Assume that Ringwood Manufacturing manages its cash flow from its home office. R cash disbursements by category and month. In setting its budget for the next six months, beginnin n July, it used the following managerial guidelines: in gwood controls Guidelines Category Purchases. . . . . . . . . .. Pay half in current and half in following month. Payrol..... . . . . . ...Pay 70 percent in current month and 30 percent in following month Loan payments. Pay total amount due each month. Predicted activity for selected months follow: Category June July August 0,000 74,000 79,000 85,000 130,000 140,000 150,000 130,000 40,000 40,000 45,000 45,000 Purchases. Required Prepare a schedule showing cash disbursements by account for July and August.

Explanation / Answer

The following is the schedule showing cash disbursements by account for July and August.

Accounts payable payment in July = 50% of Junes purchases + 50% of july's purchases

=> 50%*74,000 =>$37,000.

50% * 79,000 =>$39,500.

total = 37,000 +39,500 =>76,500.

2.Accounts payable in AUgust = 50% of july purchase + 50% of august purchase.

=>50%*79,000 + 50%* 85,000

=>39,500 + 42,500

=>$82,000.

3. Payroll in July = 30% of june + 70% of july

=>30% * 140,000 + 70% * 150,000

=.$147,000.

4. Payroll in august = 30% of july + 70% of august

=>30% * 150,000 + 70% * 130,000

=>$136,000.

Category July August Accounts payable (purchases) (see note) $76,500 $82,000 Payroll (see note) $147,000 $136,000 Loan payments (paid in same month) $45,000 $45,000 Total cash disbursements in the month $268,500 $263,000