Problem 26-10 Calculating the Cash Budget Here are some important figures from t

Question

Problem 26-10 Calculating the Cash Budget

Here are some important figures from the budget of Cornell, Inc., for the second quarter of 2013:

The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase.

In March 2013, credit sales were $302,400, and credit purchases were $224,640. Use the above information to complete the following cash budget. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.)

Here are some important figures from the budget of Cornell, Inc., for the second quarter of 2013:

Explanation / Answer

Cash budget is as follows:

Particulars April May June Beginning cash balance         4,03,200         3,58,344         4,57,690 Cash receipts: Collected in the month of sale@35%         1,91,520         1,99,584         2,20,752 Collected in the following month @60%         1,81,440         3,28,320         3,42,144 Total collections         3,72,960         5,27,904         5,62,896 Cash disbursements Credit purchase         2,24,640         2,11,680         2,52,720 Wages,taxes and expense            57,240            69,422            72,432 Interest            16,416            16,416            16,416 Equipment purchase         1,19,520         1,31,040 Total disbursement         4,17,816         4,28,558         3,41,568 Closing cash balance         3,58,344         4,57,690         6,79,018

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