Question

Jones company has sales of $400,000 in July and $500,000 in August. It’s purchases are $250,000 in July and $300,000 in August. Accounts payable at the beginning of July are $110,000. All sales are for cash. Payments for purchases are paid for half in the month of purchase and half in the following month. Expenses for each month are the following; rent $10,000; depreciation, $4,000; Utilities, $1,000; sales salaries, 10% of sales; administrative expenses, 5% of sales. Prepare a cash receipts and disbursement schedule for July and for August. Beginning cash balance was $60,000 on the first day of August.

Answer 1

	Cash budget	July	August
	Beginning cash balance	60,000	1,54,000
Add	Cash collections	400000	500000
	Total collections	4,60,000	6,54,000
Less	Cash disbursements
	Payment of material	235000	275000
	Administrative expense 5 % of sales	20000	25000
	Rent	10000	10000
	Utilities	1000	1000
	Sales salaries 10% of sales	40000	50000
	Total payments	306000	361000
	cash balance	1,54,000	2,93,000
	Cash disbursement	July	August
	Accounts payable	110000
	For july month	125000	125000
	For august month		150000
	Total disbursement	235000	275000