The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:
|Selling and administrative expenses||42,000||44,000||78,000|
The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.
Current assets as of September 1 include cash of $46,000, marketable securities of $65,000, and accounts receivable of $135,100 ($29,100 from July sales and $106,000 from August sales). Sales on account for July and August were $97,000 and $106,000, respectively. Current liabilities as of September 1 include $8,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $18,000 will be made in October. Bridgeport’s regular quarterly dividend of $8,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $45,000.
1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.
|Bridgeport Housewares Inc.|
|For the Three Months Ending November 30|
|Estimated cash receipts from:|
|Cash sales||$fill in the blank 76189a07fff204d_2||$fill in the blank 76189a07fff204d_3||$fill in the blank 76189a07fff204d_4|
|Collection of accounts receivable||fill in the blank 76189a07fff204d_6||fill in the blank 76189a07fff204d_7||fill in the blank 76189a07fff204d_8|
|Total cash receipts||$fill in the blank 76189a07fff204d_9||$fill in the blank 76189a07fff204d_10||$fill in the blank 76189a07fff204d_11|
|Less estimated cash payments for:|
|$fill in the blank 76189a07fff204d_13||$fill in the blank 76189a07fff204d_14||$fill in the blank 76189a07fff204d_15|
|fill in the blank 76189a07fff204d_17||fill in the blank 76189a07fff204d_18||fill in the blank 76189a07fff204d_19|
|fill in the blank 76189a07fff204d_21|
|fill in the blank 76189a07fff204d_23|
|fill in the blank 76189a07fff204d_25|
|Total cash payments||$fill in the blank 76189a07fff204d_26||$fill in the blank 76189a07fff204d_27||$fill in the blank 76189a07fff204d_28|
|$fill in the blank 76189a07fff204d_30||$fill in the blank 76189a07fff204d_31||fill in the blank 76189a07fff204d_32|
|fill in the blank 76189a07fff204d_34||fill in the blank 76189a07fff204d_35||fill in the blank 76189a07fff204d_36|
|Cash balance at end of month||$fill in the blank 76189a07fff204d_37||$fill in the blank 76189a07fff204d_38||$fill in the blank 76189a07fff204d_39|
|fill in the blank 76189a07fff204d_41||fill in the blank 76189a07fff204d_42||fill in the blank 76189a07fff204d_43|
|Excess or (deficiency)||$fill in the blank 76189a07fff204d_44||$fill in the blank 76189a07fff204d_45||$fill in the blank 76189a07fff204d_46|
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