Cash Budget Wilson\'s Retail Company is planning a cash budget for the next thre
ID: 2597190 • Letter: C
Question
Cash Budget Wilson's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows: Month Sales Revenue Month Sales Revenue January $300,000 March $200,000 February 205,000 April 190,000 All sales are on credit; 60 percent is collected during the month of sale, and 40 percent is collected during the next month. Cost of goods sold is 70 percent of sales. Payments for merchandise sold are made in the month following the month of sale. Operating expenses total $44,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $40,000. Prepare monthly cash budgets for February, March, and April. Use negative signs only with beginning and ending cash balances, when appropriate. Do not use negative signs with disbursement answers. Please show work Wilson's Retail Company Cash Budgets February, March, and April February March April Cash balance, beginning
Explanation / Answer
Particulars
January
February
March
April
Opening Cash Balance (A)
40000
29000
43500
Sales Revenue
300000
205000
200000
190000
Cash collection from sale (60%) (B)
300000*60% = 180000
205000*60% = 123000
200000*60% = 120000
190000*60% = 114000
Cash collection from sale (40%) (C)
300000*40% = 120000
205000*40% = 82000
200000*40% = 80000
Cost of goods sold
300000*70% = 210000
205000*70% = 143500
200000*70% = 140000
190000*70% = 133000
Payment for purchases (D)
210000
143500
140000
Cash paid for operating expenses (E)
44000
44000
44000
44000
Ending cash balance (A+B+C-D-E)
29000
43500
53500
Particulars
January
February
March
April
Opening Cash Balance (A)
40000
29000
43500
Sales Revenue
300000
205000
200000
190000
Cash collection from sale (60%) (B)
300000*60% = 180000
205000*60% = 123000
200000*60% = 120000
190000*60% = 114000
Cash collection from sale (40%) (C)
300000*40% = 120000
205000*40% = 82000
200000*40% = 80000
Cost of goods sold
300000*70% = 210000
205000*70% = 143500
200000*70% = 140000
190000*70% = 133000
Payment for purchases (D)
210000
143500
140000
Cash paid for operating expenses (E)
44000
44000
44000
44000
Ending cash balance (A+B+C-D-E)
29000
43500
53500
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