Quagmire Inc. has prepared the following sales budget for the quarter of April, May and June:

Sales Budget
	April	May	June	Total
Sales in units	12500	16000	14000	42500
Selling price per unit	x $50	x $50	x $50
Sales revenue	$625000	$800000	$700000	$2125000

All of the sales are on credit.
Quagmire collects from customers as follows:

45% of sales in the month of sale
35% in the month following the sale, and
20% in the second month following the sale.

Cash receipts budget
	April	May	June	Total
Collect from current sales	281250	360000	315000	956250
Collect from last month	253750	218750	280000	752500
Collect from 2 mos. Prior	135000	145000	125000	405000
Cash receipts	$ 670000	$ 723750	$ 720000	$ 2113750

Quagmire expects cost of goods sold to be 30% of sales.
They keep 10% of next months expected cost of goods sold in ending inventory. Below are budgeted purchases of inventory.
All purchases are paid for in the SAME month as the purchase.

Purchases Budget
	April	May	June	Total
Budgeted cost of goods sold	187500	240000	210000	637500
plus desired ending inventory	24000	21000	17250	17250
Total needs	211500	261000	227250	654750
less beginning inventory	(18750)	(24000)	(21000)	(18750)
Cost of purchases	192750	237000	206250	636000

Below is the budget for variable and fixed selling and administrative expenses.
Selling and admin expenses are paid in the month AFTER they are incurred.
Fixed expenses include depreciation of 17250 each month.

Sales and Admin Budget
	April	May	June	Total
Variable S&A expenses	125000	160000	140000	425000
Fixed S&A (including depreciation)	172500	172500	172500	517500

Quagmire has $152000 of cash on hand at he beginning of May.

Prepare a cash budget for May and June. (Use excel so that multiple attempts are easier.)

Compute the beginning balance in cash for June.
Hint: the answer is 358500. If you computed this correctly (it was your ending cash balance for May), you should be able to answer the next question too!

Compute the ending balance in cash for June.

 

Answer rating: 100% (QA)

May Cash Budget Cash Balance at the Beginning of May152000 Receipts Sales in the Month of May800000 Collections from Last Month253750 Collections from 2 Months Prior135000 Total Cash Receipts1188750 D... View the full answer