Question

Cooper Company, a retailer of camping supplies has budgeted activity for January using the following data:

Cash sales		$26,200
Credit sales (60% collected in month of sale)		409,900
Selling and administrative costs (including depreciation)		52,610
Depreciation expense		4,890
Merchandise Inventory, January 1		21,110
Merchandise Inventory, January 31		21,580
Beginning cash balance		2,730
Minimum cash balance required		2,300
Cost of goods sold is 57% of Cooper’s selling price
All purchases are paid in cash
Selling and administrative costs are paid in month of purchase

Prepare a cash budget for January

Answer 1

Answer
Beginning cash balance						$         2,730
Cash receipts		(26200+409900*60%)=				$     272,140
total cash available						$     274,870
less:disbursement
material purchases(26200+409900)*57%+21580-21,110						$     249,047
selling and administrative expense				(52,610-4890)		$       47,720
total cash disbursement						$     296,767
cash excess (needed)						-$       21,897
Borrowing ( 21897+2300)						$       24,197
ending cash balance						$         2,300