Financial and Managerial Accounting (Looseleaf) (Custom Package)
Financial and Managerial Accounting (Looseleaf) (Custom Package)
6th Edition
ISBN: 9781259754883
Author: Wild
Publisher: MCG
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Chapter 20, Problem 31E

(1)

To determine

To prepare: Cash receipt budget for the month of July, August and September.

(1)

Expert Solution
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Explanation of Solution

Company K
Cash Receipt Budget
Particulars July Amount ($) August Amount ($) September Amount ($)
Sales 64,000 80,000 48,000
Cash collection:
Previous sale (80% of previous sale) 45,000 51,200 64,000
Current sale (20% of current sale) 12,800 16,000 9,600
Total 57,800 67,200 73,600
Table (1)

(2)

To determine

To prepare: Monthly cash budget for the month of July, August and September.

(2)

Expert Solution
Check Mark

Explanation of Solution

Company K
Cash Budget
Particulars July Amount ($) August Amount ($) September Amount ($)
Beginning cash balance 15,000 15,000 25,504
Add: Cash receipts (From part 1) 57,800 67,200 73,600
Total cash available 72,800 82,200 99,100
Less: Cash disbursement (Working Note 1) 57,300 52,100 49,700
Interest expense (working note 2) 50 46 -
Preliminary cash balance 15,450 30,054 49,404
Less: Required ending cash balance 15,000 15,000 15,000
Surplus 450 15,054 34,404
Beginning balance of loan 5,000 4,550 0
Add: Additional loan from bank 0 0 0
Less: Repayment of loan 450 4,550 0
Ending loan balance 4,550 0 0
Ending cash balance to be carried forward next month 15,000 25,504 49,404
Table (2)

Working Note 1:

Company K
Cash Disbursements
Particulars July Amount ($) August Amount ($) September Amount ($)
Cash payments for merchandise 40,400 33,600 34,400
Sales commission ( sales×10% ) 6,400 8,000 4,800
Salaries 4,000 4,000 4,000
Rent 6,500 6,500 6,500
Total 57,300 52,100 49,700
Table (3)

Working Note 2:

Formula to calculate interest expense for the month,

    Interest expense=Beginning balance of loan×1% 

For April,
Given,
Beginning balance of loan $5,000.

Substitute $5,000 for beginning balance.

    Interest expense=$5,000×1% =$50

For May,
Beginning balance of loan $4,550 (calculated).

Substitute $4,550 for beginning balance.

    Interest expense=$4,550×1% =$46

For June,
Beginning balance of loan $0 (calculated).

Substitute $0 for beginning balance.

    Interest expense=$0×1% =$0

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Chapter 20 Solutions

Financial and Managerial Accounting (Looseleaf) (Custom Package)

Ch. 20 - How does budgeting help management coordinate and...Ch. 20 - Why is the sales budget so important to the...Ch. 20 - What is the selling expense budget? What is the...Ch. 20 - Budgeting promotes good decision making by...Ch. 20 - GOOGLE Google prepares a cash budget. What is a...Ch. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Prob. 14DQCh. 20 - Prob. 1QSCh. 20 - Prob. 2QSCh. 20 - Prob. 3QSCh. 20 - Prob. 4QSCh. 20 - Prob. 5QSCh. 20 - Prob. 6QSCh. 20 - Prob. 7QSCh. 20 - Prob. 8QSCh. 20 - Prob. 9QSCh. 20 - Prob. 10QSCh. 20 - Prob. 11QSCh. 20 - Prob. 12QSCh. 20 - Prob. 13QSCh. 20 - Prob. 14QSCh. 20 - Prob. 15QSCh. 20 - Manufacturing: Production budget P1 Atlantic Surf...Ch. 20 - Prob. 17QSCh. 20 - Prob. 18QSCh. 20 - Prob. 19QSCh. 20 - Cash receipts, with uncollectible accounts P2 The...Ch. 20 - Cash receipts, with uncollectible accounts P2 Well...Ch. 20 - Prob. 22QSCh. 20 - Prob. 23QSCh. 20 - Prob. 24QSCh. 20 - Prob. 25QSCh. 20 - Prob. 26QSCh. 20 - Prob. 27QSCh. 20 - Prob. 28QSCh. 20 - Prob. 29QSCh. 20 - Prob. 30QSCh. 20 - Prob. 31QSCh. 20 - Prob. 32QSCh. 20 - Prob. 1ECh. 20 - Prob. 2ECh. 20 - Prob. 3ECh. 20 - Prob. 4ECh. 20 - Exercise 20-5 Manufacturing: Direct labor budget...Ch. 20 - Prob. 6ECh. 20 - Prob. 7ECh. 20 - Prob. 8ECh. 20 - Prob. 9ECh. 20 - Prob. 10ECh. 20 - Prob. 11ECh. 20 - Prob. 12ECh. 20 - Prob. 13ECh. 20 - Prob. 14ECh. 20 - Prob. 15ECh. 20 - Prob. 16ECh. 20 - Prob. 17ECh. 20 - Prob. 18ECh. 20 - Prob. 19ECh. 20 - Prob. 20ECh. 20 - Prob. 21ECh. 20 - Prob. 22ECh. 20 - Prob. 23ECh. 20 - Prob. 24ECh. 20 - Prob. 25ECh. 20 - Prob. 26ECh. 20 - Prob. 27ECh. 20 - Prob. 28ECh. 20 - Prob. 29ECh. 20 - Prob. 30ECh. 20 - Prob. 31ECh. 20 - Prob. 32ECh. 20 - Prob. 33ECh. 20 - Prob. 34ECh. 20 - Prob. 1PSACh. 20 - Prob. 2PSACh. 20 - Prob. 3PSACh. 20 - Prob. 4PSACh. 20 - Prob. 5PSACh. 20 - Prob. 6PSACh. 20 - Prob. 7PSACh. 20 - Prob. 8PSACh. 20 - Prob. 1PSBCh. 20 - Prob. 2PSBCh. 20 - Prob. 3PSBCh. 20 - Prob. 4PSBCh. 20 - Prob. 5PSBCh. 20 - Prob. 6PSBCh. 20 - Prob. 7PSBCh. 20 - Prob. 8PSBCh. 20 - Prob. 20SPCh. 20 - Prob. 1BTNCh. 20 - Prob. 2BTNCh. 20 - ETHICS CHALLENGE C1 BTN 20-3 Both the budget...Ch. 20 - Prob. 4BTNCh. 20 - Prob. 5BTNCh. 20 - Prob. 6BTNCh. 20 - Prob. 7BTNCh. 20 - Prob. 8BTNCh. 20 - Prob. 9BTN
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