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The treasurer of Unisyms Company has accumulated the following budget information for the first two months of the coming year:
|
March |
April |
|
| Sales. |
$450,000 |
$520,000 |
| Manufacturing costs |
290,000 |
350,000 |
| Selling and administrative | ||
| expenses |
41,400 |
46,400 |
| Capital additions |
250,000 |
— |
The company expects to sell about 35% of its merchandise for cash. Of sales on account, 80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale. One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month. Depreciation, insurance, and property taxes represent $6,400 of the probable monthly selling and administrative expenses. Insurance is paid in February and a $40,000 installment on income taxes is expected to be paid in April. Of the remainder of the selling and administrative expenses, one-half are expected to be paid in the month in which they are incurred and the balance in the following month. Capital additions of $250,000 are expected to be paid in March.
Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000. Current liabilities as of March 1 are composed of accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for operating expenses). Management desires to maintain a minimum cash balance of $20,000.
Prepare a monthly cash budget for March and April.
—————————————————————————————-
| Unisyms Company | Unisyms Company | |||||
| Schedule of Collections from Sales | Cash Budget | |||||
| For Two Months Ending April 30 | For Two Months Ending April 30 | |||||
| March | April | March | April | |||
| Cash Sales: | $157,500 | $182,000 | Estimated Cash receipts from: | |||
| Cash Sales | $157,500 | $182,000 | ||||
| Sales on Account: | Collections of accounts receivable | $285,000 | $328,900 | |||
| Collection from month prior sales | $51,000 | $58,500 | Total cash receipts | $442,500 | $510,900 | |
| Collection from current month’s sales | $234,000 | $270,400 | Estimated cash payments for: | |||
| Total Sales on Account | $285,000 | $328,900 | Manufacturing costs | $174,500 | $305,000 | |
| Selling and administrative expenses | $37,000 | $37,500 | ||||
| Capital additions | $250,000 | |||||
| Unisyms Company | Note Payable | |||||
| Schedule of Payments for Manufacturing Costs | Dividends | |||||
| For Two Months Ending April 30 | Income taxes | $40,000 | ||||
| March | April | Total cash payments | $461,500 | $382,500 | ||
| Payments of prior month’s manufacturing costs | $102,000 | $217,500 | Cash increase (decrease) | ($19,000) | $128,400 | |
| Payments of current month’s manufacturing costs | $72,500 | $87,500 | Cash balance at beginning of month | $45,000 | $26,000 | |
| Total Payments | $174,500 | $305,000 | Cash balance at end of month | $26,000 | $154,400 | |
| Minimum cash balance | $20,000 | $20,000 | ||||
| Excess (deficiency) | $6,000 | $134,400 | ||||
| Unisyms Company | ||||||
| Schedule of Payments for Selling & Admin Expenses | ||||||
| For Two Months Ending April 30 | ||||||
| March | April | |||||
| Payments of prior month’s manufacturing costs | $19,500 | $17,500 | ||||
| Payments of current month’s manufacturing costs | $17,500 | $20,000 | ||||
| Total Payments | $37,000 | $37,500 | ||||
| March | April | |||||
| Sales: | $450,000 | $520,000 | ||||
| Manufacturing Costs: | $290,000 | $350,000 | ||||
| Selling & Admin Expenses: | $41,400 | $46,400 | ||||
| Capital Additions: | $250,000 | |||||
| Total Sales on Account: | $292,500 | $338,000 | ||||
| March 1 Current Assets: | ||||||
| Cash: | $45,000 | |||||
| Accounts Receivable: | $51,000 | |||||
| March 1 Current Liabililities: | ||||||
| Accounts Payable: | $121,500 | |||||
| Materials Purchased: | $102,000 | |||||
| Operating Expenses: | $19,500 | |||||
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