Prepare a monthly cash budget for the remainder of the fiscal year (through September). A template is
Question:
Prepare a monthly cash budget for the remainder of the fiscal year (through September). A template is attached. Some additional information that may be helpful in preparing the cash budget:
-When a customer has provided a prepayment on part of an order, the prepayment will be applied against shipments on that order until the prepayment is used up. This should be shown in the cash budget as a deduction from sales.
-The amount of delay between the month of shipment and the cash receipt is determined by the payment terms offered by Jackson to its customers. 100% in the First Month After Sale indicates cash for all sales on account will be received by Jackson 30 days after the sale. The delay between Jackson's purchase and payment for materials is determined by the payment terms negotiated by Jackson with its suppliers. This lag must be accounted for when you enter the payments. Therefore, the amount paid for raw materials purchases from suppliers in June will come from the accounts payable balance on the May financial statements, and the amounts for subsequent months will come from the projection in the case. When the case mentions that prepaid expenses and other accrued expenses will remain the same as the end of May, they mean that operating expenses will be level during the case time period.
-Jackson's quarterly income tax payments of $375,000 each are due in June and September.
-Jackson does not have a minimum cash balance amount.
Accounting What the Numbers Mean
ISBN: 978-0078025297
10th edition
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele