Question

Use the following information to prepare the September cash budget for PTO Manufacturing Co. The following information relates to expected cash receipts and cash payments for the month ended September 30.

1. Beginning cash balance, September 1, $41,000.
2. Budgeted cash receipts from sales in September, $264,000.
3. Raw materials are purchased on account. Purchase amounts are: August (actual), $77,000, and September (budgeted), $108,000. Payments for direct materials are made as follows: 65% in the month of purchase and 35% in the month following purchase.
4. Budgeted cash payments for direct labor in September, $34,000.
5. Budgeted depreciation expense for September, $4,000.
6. Other cash expenses budgeted for September, $60,000.
7. Accrued income taxes payable in September, $10,500.
8. Bank loan interest payable in September, $1,800

PTO MANUFACTURING COMPANY
Cash Budget
For Month Ended September 30
Beginning cash balance	$41,000selected answer correct
Cash receipts from sales	264,000selected answer correct
Total cash available		$305,000
Cash payments for:
Direct materials	91,800selected answer incorrect
Direct labor	31,000selected answer incorrect
Other expenses	56,000selected answer incorrect
Accrued taxes	10,700selected answer incorrect
Interest on bank loan	1,700selected answer incorrect
Total cash payments		191,200
Ending cash balance		$113,800

Answer 1

PTO MANUFACTURING COMPANY Cash Budget For Month Ended September 30 Beginning cash balance $41,000 Cash receipts from sales 264,000 Total cash available $305,000 Cash payments for: Direct materials August - 77000 * 35% = 26950 september - 108000*65% = 70200 97150 Direct labor 34000 Other expenses 60000 Accrued taxes 10500 Interest on bank loan 1800 Total cash payments 203450 Ending cash balance 101550

NOTE !

1. DEPRECIATION

deperciation is a non- cash expense . Therefore depreciation does not fit into cash budget, which tracks all real cash inflows and outflows.