The controller of Sonoma Housewares Inc. instructs you to prepare a manthly cash budget for the next three months. You are presented with the following budget information: May June July Sales $135,000 $159,000 $227,000 Manufacturing costs 57,000 68,000 82,000 Selling and administrative expenses 39,000 43,000 50,000 Capital expenditures 54,000 The company expects to sell about 15% of its merchandise for cash. Of sales on account, 70% are expected to be coilected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $7,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 85% are expected to be paid in the month in which they are incurred and the balance in the following month, Current assets as of May 1 include cash of $51,000, marketable securities of $73,000, and accounts receivable of $150,400 ($118,000 from April sales and $32,400 from March sales). Sales on account for March and April were $108,000 and Si18,000, respectively. Current liabilities as of May 1 include $15,000 of accounts payable incurred In April for manufacturing costs. All selling and administrative expenses are paid in cash in the perlod they are incurred. An estimated income tax payment of $19,000 will be made in June. Sonoma's regular quarterly dividend of $7,000 is expected to be declared In June and paid in July. Management wants to maintaln a minimum cash balance of $40,000. Required: 1. Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign.
The controller of Sonoma Housewares Inc. instructs you to prepare a manthly cash budget for the next three months. You are presented with the following budget information: May June July Sales $135,000 $159,000 $227,000 Manufacturing costs 57,000 68,000 82,000 Selling and administrative expenses 39,000 43,000 50,000 Capital expenditures 54,000 The company expects to sell about 15% of its merchandise for cash. Of sales on account, 70% are expected to be coilected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $7,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 85% are expected to be paid in the month in which they are incurred and the balance in the following month, Current assets as of May 1 include cash of $51,000, marketable securities of $73,000, and accounts receivable of $150,400 ($118,000 from April sales and $32,400 from March sales). Sales on account for March and April were $108,000 and Si18,000, respectively. Current liabilities as of May 1 include $15,000 of accounts payable incurred In April for manufacturing costs. All selling and administrative expenses are paid in cash in the perlod they are incurred. An estimated income tax payment of $19,000 will be made in June. Sonoma's regular quarterly dividend of $7,000 is expected to be declared In June and paid in July. Management wants to maintaln a minimum cash balance of $40,000. Required: 1. Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Question
Transcribed Image Text:The controller of Sonoma Housewares Inc. instructs you to prepare a manthly cash budget for the next three months. You are presented with the following budget
information:
May
June
July
Sales
$135,000 $159,000
$227,000
Manufacturing costs
57,000
68,000
82,000
Selling and administrative expenses
39,000
43,000
50,000
Capital expenditures
54,000
The company expects to sell about 15% of its merchandise for cash. Of sales on account, 70% are expected to be coilected in the month following the sale and the
remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $7,000 of the estimated monthly
manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing
costs, 85% are expected to be paid in the month in which they are incurred and the balance in the following month,
Current assets as of May 1 include cash of $51,000, marketable securities of $73,000, and accounts receivable of $150,400 ($118,000 from April sales and $32,400 from
March sales). Sales on account for March and April were $108,000 and Si18,000, respectively. Current liabilities as of May 1 include $15,000 of accounts payable incurred
In April for manufacturing costs. All selling and administrative expenses are paid in cash in the perlod they are incurred. An estimated income tax payment of $19,000 will
be made in June. Sonoma's regular quarterly dividend of $7,000 is expected to be declared In June and paid in July. Management wants to maintaln a minimum cash
balance of $40,000.
Required:
1. Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency
which should be indicated with a minus sign.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education