Question

# Cash Budget Wilson's Retail Company is planning a cash budget for the next three months. Estimated...

Cash Budget
Wilson's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows:

Month Sales Revenue Month Sales Revenue
January \$300,000 March \$200,000
February 245,000 April 155,000

All sales are on credit; 60 percent is collected during the month of sale, and 40 percent is collected during the next month. Cost of goods sold is 70 percent of sales. Payments for merchandise sold are made in the month following the month of sale. Operating expenses total \$40,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be \$30,000.

Prepare monthly cash budgets for February, March, and April.

Use negative signs only with beginning and ending cash balances, when appropriate. Do not use negative signs with disbursement answers.

Wilson's Retail Company
Cash Budgets
February, March, and April
February March April

Wilson's Retail Company
Cash Budgets
February, March, and April

February

March

April

Cash balance, beginning

30,000.00

47,000.00

53,500.00

Total Cash receipts

267,000.00

218,000.00

173,000.00

Cash available

297,000.00

265,000.00

226,500.00

Total disbursements

250,000.00

211,500.00

180,000.00

Cash balance, ending

47,000.00

53,500.00

46,500.00

Total Cash receipts

February     = (\$3,00,000*0.40)+(\$2,45,000*0.60) = \$2,67,000

March         = (\$2,45,000*0.40) + (\$2,00,000*0.60) = \$2,18,000

April           = (\$2,00,000*0.40) + (\$1,55,000*0.60) = \$1,73,000

Total disbursements

February     = \$300000*0.70 + 40000 = \$2,50,000

March         = \$245000*0.70 + 40000 = \$2,11,500

April           = \$200000*0.70 + 40000 = \$1,80,000

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