Nelson Company is preparing its budget for the third quarter. The cash balance on June 30 was $30,000. The company wants a minimum cash balance of $12,000, otherwise borrowing is undertaken at the beginning of the month at 10% interest. The interest expense payment and repayment of principal is not made until the entire amount borrowed can be repaid at once. Additional budgeted data are provided here: July Aug Sep Cash collections $30,000 $58,000 $54,000 Cash payments: Purchases of direct materials 25,000 26,000 21,000 Direct labor 10,000 12,000 11,000 Operating expenses 4,000 6,000 4,000 Capital expenditures 12,000 13,000 11,000 Prepare the cash budget for July and August, using the following format. July August Total Beginning cash balance. Cash receipts Cash available Cash payments: Purchases of direct materials Direct labor Operating expenses Capital Expenditures Total cash payments Ending cash balance before financing Minimum cash balance desired Projected cash excess (deficiency) Financing: Borrowing
Nelson Company is preparing its budget for the third quarter. The cash balance on June 30 was $30,000. The company wants a minimum cash balance of $12,000, otherwise borrowing is undertaken at the beginning of the month at 10% interest. The interest expense payment and repayment of principal is not made until the entire amount borrowed can be repaid at once. Additional budgeted data are provided here: July Aug Sep Cash collections $30,000 $58,000 $54,000 Cash payments: Purchases of direct materials 25,000 26,000 21,000 Direct labor 10,000 12,000 11,000 Operating expenses 4,000 6,000 4,000 Capital expenditures 12,000 13,000 11,000 Prepare the cash budget for July and August, using the following format. July August Total Beginning cash balance. Cash receipts Cash available Cash payments: Purchases of direct materials Direct labor Operating expenses Capital Expenditures Total cash payments Ending cash balance before financing Minimum cash balance desired Projected cash excess (deficiency) Financing: Borrowing
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 5PA: Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash...
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Nelson Company is preparing its budget for the third quarter. The cash balance on June 30 was $30,000. The company
wants a minimum cash balance of $12,000, otherwise borrowing is undertaken at the beginning of the month at 10%
interest. The interest expense payment and repayment of principal is not made until the entire amount borrowed can be
repaid at once. Additional budgeted data are provided here:
July Aug Sep
Cash collections $30,000 $58,000 $54,000
Cash payments:
Purchases of direct materials 25,000 26,000 21,000
Direct labor 10,000 12,000 11,000
Operating expenses 4,000 6,000 4,000
Capital expenditures 12,000 13,000 11,000
Prepare the cash budget for July and August, using the following format.
July August Total
Beginning cash balance
Cash receipts
Cash available
Cash payments:
Purchases of direct materials
Direct labor
Operating expenses
Capital Expenditures
Total cash payments
Ending cash balance before financing
Minimum cash balance desired
Projected cash excess (deficiency)
Financing:
Borrowing
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