Answer:
Itami Wholesale Co.
Cash Budget
December January
Beginning balance $88,000 $47,190
Cash collections 295,250 265,050
Total cash receipts $383,250 $312,240
Cash Disbursements:
Note payable $100,000
Payment for purchases $262,560 222,080
Payment for marketing,
distribution, and
customer-service 73,500 57,500
Total disbursements $336,060 $375,580
Ending cash balance $47,190 ($67,340)
Explanation:
a) Data and Calculations:
Inventory beginning balance = $65,200
Accounts payable beginning balance = $136,000
Sales:
50% collected ($ - 3%)
30% second month
14% third month
6% uncollectible
Actual and projected Sales:
October November December January February
Actual sales $280,000 $320,000
Estimated sales $330,000 $250,000 $240,000
50% collected ($ - 3%) $160,050 $121,250 $116,400
30% second month 96,000 99,000 75,000
14% third month 39,200 44,800 46,200
Total cash collections $295,250 $265,050 $237,600
Payment for merchandise: November December January February
Ending inventory 820 830 750 740
Sales in units 3,200 3,300 2,500 2,400
Units available for sale 4,020 4,130 3,250 3,140
Beginning inventory 780 820 830 750
Purchases 3,240 3,310 2,420 2,390
Cost of purchases $259,200 $264,800 $193,600 $191,200
Payment:
60% purchase month 155,520 158,880 116,160 114,720
40% the following month 103,680 105,920 77,440
Total payment for purchases $262,560 $222,080 $192,160
Budgeted marketing, distribution, and customer-service costs for the year = $600,000
Fixed cost = $120,000
Depreciation = $30,000
Cash payment for fixed cost = $90,000
Monthly payment for fixed cost = $7,500
Variable cost for the year = $480,000 ($600,000 - $120,000)
December = $330,000/$2,400,000 * $480,000 = $66,000
January = $250,000/$2,400,000 * $480,000 = $50,000
December January
Fixed cost payment $7,500 $7,500
Variable cost payment 66,000 50,000
Total cash payment $73,500 $57,500
