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Problem 20-2A Manufacturing: Cash budget LO P2

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Built-Tight is preparing its master budget for the quarter ended September 30, 2017. Budgeted sales and cash payments for product costs for the quarter follow:

	July			August			September
Budgeted sales	$	64,000		$	80,000		$	48,000
Budgeted cash payments for
Direct materials		16,160			13,440			13,760
Direct labor		4,040			3,360			3,440
Factory overhead		20,200			16,800			17,200

Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,000 in accounts receivable; and a $5,000 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,000 per month), and rent ($6,500 per month).

rev: 03_17_2020_QC_CS-204679

Problem 20-2A Part 1

(1) Prepare a cash receipts budget for July, August, and September.

BUILT-TIGHT
Cash Receipts Budget
For July, August, and September
	July	August	September
Less: ending accounts receivable
Cash receipts from:
Total cash receipts

Answer 1

BUILT-TIGHT
Cash Receipts Budget
For July, August, and September
	July	August	September
Sales	64000	80000	48000
Less: ending accounts receivable	51200	64000	38400
Cash receipts from:
Cash sales	12800	16000	9600
Collection of prior month's receivables	45000	51200	64000
Total cash receipts	57800	67200	73600

Workings:
Ending accounts receivable:
July	51200	=64000*80%
August	64000	=80000*80%
September	38400	=48000*80%