Short Answer: 1. Preparation of cash budget (5.4 points) Use the following infor

Question

Short Answer: 1. Preparation of cash budget (5.4 points) Use the following information to prepare a cash budget for Knightsbridge Corporation for the month of June 2012. In May, 30-day credit sales were $175,000, 80% of this amount is estimated to be collectible in June. June sales are estimated to be S425,000; cash sales are usually 25% of total sales. Only 10% of credit sales are collected in the month in which the sale is made Total fixed expenses are $60,000 per month, including $26,000 depreciation. Variable expenses are 55% of sales. All expenses requiring payment are paid in cash when incurred. A $40,000 note payable must be paid on June 30 As of May 31, the cash balance is $94,000. KNIGHTSBRIDGE CORPORATION Cash Budget For the Month of June 2012 Cash balance at beginning of monh.. Receipts Collections from customers: May credit sales June credit sales June cash sales Total cash available.. Disbursements: Fixed expenses Variable expenses Note payable... Cash balance at end of month.... 9

Explanation / Answer

Preparation of Cash Budget

KNIGHTSBRIDGE CORPORATION

CASH BUDGET

FOR THE MONTH OF JUNE 2012

Particulars Amount Amount Cash Balance at the beginning of Month $94000 Receipts Collection From Customers May Credit Sales ($175000 * 80%) $140000 June Credit Sales ($425000 * 75% * 10%) $31875 June Cash Sales ($425000 * 25%) $106250 $278125 Total Cash Available $372125 Disbursements Fixed Expenses ($60000 - $26000) $34000 Variable Expenses ($425000 * 55%) $233750 Note Payable $40000 $307750 Cash Balance at the End of Month ($372125 - $307750) $64375

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