Kelsey is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for merchandise for t

Question

3 years ago

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Kelsey is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for merchandise for t

he next three months follow. Budgeted July August September Sales $ 62,700 $ 81,300 $ 49,300 Cash payments for merchandise 43,000 32,300 33,100 Sales are 15% cash and 85% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $13,600 in cash; $50,000 in accounts receivable; $5,800 in accounts payable; and a $3,300 balance in loans payable. A minimum cash balance of $13,300 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 2% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (5% of sales), office salaries ($5,300 per month), and rent ($7,800 per month). (1) Prepare a cash receipts budget for July, August, and September. (2) Prepare a cash budget for each of the months of July, August, and September.

Business

1 answer:

dybincka [34] · Answer 1 · 2022-06-06T22:32:13+03:00

Answer:

(1)Total cash receipts:

July = $59,405

August = $65,490

September = $76,500

2-a. Ending Cash Balance:

July = $13,300

August = $26,371

September = $54,206

2-b. Loan Balance End of Month:

July = $2,896

August = $0

September = $0

Explanation:

(1) Prepare a cash receipts budget for July, August, and September.

Note: See part (1) of the attached excel file for the cash receipts budget for July, August, and September.

From the attached excel file, we have:

Total cash receipts:

July = $59,405

August = $65,490

September = $76,500

(2) Prepare a cash budget for each of the months of July, August, and September.

Note: See part (2) of the attached excel file for the cash budget for July, August, and September.

In the attached excel file, the following calculation is made:

July loan repayment = July preliminary cash balance - Minimum cash balance required = $13,704 - $13,300 = $404