Question

You are provided with the following information taken from Skysong, Inc.’s March 31, 2017, balance sheet.

Cash		$ 11,520
Accounts receivable		22,360
Inventory		36,190
Property, plant, and equipment, net of depreciation		120,200
Accounts payable		22,980
Common stock		151,200
Retained earnings		11,790

Additional information concerning Skysong, Inc. is as follows.

1.		Gross profit is 25% of sales.
2.		Actual and budgeted sales data:
		March (actual)		$ 47,600
		April (budgeted)		71,100

3.		Sales are both cash and credit. Cash collections expected in April are:
		March		$ 19,040		(40% of $ 47,600)
		April		42,660		(60% of $ 71,100)
				$ 61,700

4.		Half of a month’s purchases are paid for in the month of purchase and half in the following month. Cash disbursements expected in April are:
		Purchases March	$ 22,980
		Purchases April	28,300
			$ 51,280

5.		Cash operating costs are anticipated to be $ 12,350 for the month of April.
6.		Equipment costing $ 2,540 will be purchased for cash in April.
7.		The company wishes to maintain a minimum cash balance of $ 12,900. An open line of credit is available at the bank. All borrowing is done at the beginning of the month, and all repayments are made at the end of the month. The interest rate is 13% per year, and interest expense is accrued at the end of the month and paid in the following month.

Prepare a cash budget for the month of April. Determine how much cash Skysong, Inc. must borrow, or can repay, in April.

: select an opening name for section one select an opening name for section one : select an opening name for section two select an opening name for section two

SKYSONG, INC. Cash Budget choose the accounting period choose the accounting period						select an opening cash budget item select an opening cash budget item			$ enter a dollar amount	select between addition and deduction select between addition and deduction				select a cash budget item select a cash budget item			enter a dollar amount	select a cash budget item select a cash budget item			enter a dollar amount	select a closing name for section one select a closing name for section one			enter a total amount for section one	select a summarizing line for the first part select a summarizing line for the first part			enter a total amount for the first part	select between addition and deduction select between addition and deduction				select a cash budget item select a cash budget item			enter a dollar amount	select a cash budget item select a cash budget item			enter a dollar amount	select a cash budget item select a cash budget item			enter a dollar amount	select a cash budget item select a cash budget item			enter a dollar amount	select a closing name for section two select a closing name for section two			enter a total amount for section two	select a summarizing line for the second part select a summarizing line for the second part			enter a total amount for the second part	select an opening name for section three select an opening name for section three				select a cash budget item select a cash budget item			enter a dollar amount	select a cash budget item select a cash budget item			enter a dollar amount	select a closing cash budget item select a closing cash budget item			$ enter a total amount for the cash budget

Answer 1

		Cash Budget-April month
				$	$
	Beginning cash balance				11520
	Add: Total cash receipts				61700
	Total cash available				73220
	Cash payments for:
	Purchases			51280
	Operating expenses			12350
	Purchase of equipment			2540	66170
	Preliminary cash balance				7050
	Minimum balance required				12350
	Additional loan		(12350-7050)		5300
	Ending cash balance				12350
	Cash to be borrowed= $5300