Question

roblem 3

Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2012:

 

April

 

May

 

June

 

  Credit sales

$

312,000

 

$

291,200

 

$

350,400

 

  Credit purchases

 

118,240

 

 

141,040

 

 

166,800

 

  Cash disbursements

 

 

 

 

 

 

 

 

 

    Wages, taxes, and expenses

 

43,040

 

 

10,800

 

 

62,640

 

    Interest

 

10,480

 

 

10,480

 

 

10,480

 

    Equipment purchases

 

74,000

 

 

135,000

 

 

0

 

The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase.

In March 2012, credit sales were $196,000 and credit purchases were $134,400. Using this information, complete the following cash budget:

 

 

April

 

May

 

June

 

  Beginning cash balance

$

112,000

$

$

 

  Cash receipts

 

 

 

 

 

    Cash collections from credit sales

 

 

 

 

 

 

 

 

 

    Total cash available

$

$

$

 

  Cash disbursements

 

 

 

 

    Purchases

$

$

$

 

    Wages, taxes, and expenses

 

 

 

 

    Interest

 

 

 

 

    Equipment purchases

 

 

 

 

 

 

 

 

 

      Total cash disbursements

$

$

$

 

 

 

 

 

 

  Ending cash balance

$

$

$

 

 

 

 

 

 

Answer 1

Particulars	April	May	June
Beginning cash balance	$112,000	$105880	$115280
Cash receipts (60%)	$312000 x 60% = $187200	$291200 x 60% = $174720	$350400 x 60% = $210240
Cash collections from credit sales (35%)	$196000 x 35% = $68600	$312000 x 35% = $109200	$291200 x 35% = $101920
Total Cash available (a)	$367800	$389800	$427440
Cash Disbursements
Purchases	$134400	$118240	$141040
Wages, taxes and expenses	$43040	$10800	$62640
Interest	$10480	$10480	$10480
Equipment purchases	$74000	$135000	0
Total cash disbursements (b)	$261920	$274520	$214160
Ending cash balance (a - b)	$105880	$115280	$213280