Question

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
Cash balance, beginning	$Answer	$Answer	$Answer
Total Cash receipts	Answer	Answer	Answer
Cash available	Answer	Answer	Answer
Total disbursements	Answer	Answer	Answer
Cash balance, ending	$Answer	$Answer	$Answer

Answer 1

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