Question

Boston Company developed the following budgeted data for the month of June:

a. The June 1st cash balance is $34,700.

b. Cash sales in June are $75,000.

c. Credit sales for June are expected to be $40,000. Credit sales for May were $60,000 and for April were $50,000. 70% of credit sales are collected in the month of sale, 20% are collected in the month following the sale, and the remaining 10% are collected in the second month following the sale.

d. Purchases for May were $100,000 and for June are $80,000. 25% of purchases are paid in the month of purchase and the remaining 75% in the month following the purchase.

e. June salaries are $35,400, utilities are $14,200, and depreciation on the building and equipment is $20,000.

Required:

Prepare a cash budget for the month of June 2018.

Answer 1

Cash collections in June month:
Cash sales for June			75000
Credit sales of April (50000*10%)			5000
Credit Sales of May (60000*20%)			12000
Credit Sales of June (40000*70%)			28000
Total cash collections in June			120000
Cash disbursement in June:
Purchase of june (80000*25%)			20000
Purchase of May (100000*75%)			75000
Cash disbursal to supplier.			95000
Cash budget
Beginning Balance of cash				34700
Add: Collections from customers				120000
Total cash available				154700
Less: Cash disbursals:
Disbursal to supplier				95000
Salaries				35400
Utilities				14200
Total cash disbursals				144600
Ending balance of cash				10100