Question: Barley Restaurant Supply sells various equipment and supplies to restaurants

Barley Restaurant Supply sells various equipment and supplies to restaurants in the local and surrounding communities. The company’s controller, Barry Barley, has requested your help in preparing a cash budget for the month of June. Barry accumulated the following information for you:
a. The cash balance on June 1 was estimated to be $10,000.
b. Actual sales for April and May and budgeted sales for June are as follows:

Sales on account are collected over a two-month period, with 70 percent being collected in the first month and the remainder being collected in the second month.
c. Inventory purchases are expected to be $35,000 in June. The company pays for inventory purchases in the following month’s purchases. The balance of May’s purchases is $22,000.
d. Selling and administrative expenses are budgeted to be $14,000 for June. Of that amount, 50 percent is depreciation.
e. Equipment costing $14,000 will be purchased in June for cash.
f. Dividends in the amount of $2,500 will be paid.
g. The company wants to maintain a minimum cash balance of $10,000 and has set up a line of credit at the local bank that can be used to cover any shortage. If the company must borrow, the loan will be made at the beginning of the month, and any repayment will be made at the end of the month of repayment.

A. Prepare a cash receipts budget for June.
B. Prepare a cash disbursements budget for June.
C. Prepare a schedule that shows whether any borrowing against the line of credit isneeded.
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  • CreatedMarch 11, 2015
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