You were recently hired as an assistant controller at Just Tables (JT). JT sells one product, dining room tables made out of red cedar. You have been charged with preparing a cash budget for the second quarter (April to June) so that management can be aware of any financing requirements. You have collected the following information to assist you in preparation of the quarterly budget:Recent and forecasted sales in units are as follows: January (actual) 140 February (actual) 220 March (actual) 200 April 220 May 400 June 360 July 320 August 390 September 260 Tables are sold to retailers for $500 each. The company has a policy of having an ending inventory each month equal to 150% of the next month’s sales. The inventory balance at March 31st was 330 tables. Each table requires 15 board feet of red cedar, which the company purchases for $4 per board foot. To protect against disruptions in production, management likes to keep enough cedar on hand at all times equal to 50% of the next month’s production needs. This requirement had been met on March 31st in that the company had 3,675 board feet of red cedar in the warehouse. Purchases of lumber are paid for 50% at the time of purchase with the other 50% being paid the next month. All sales are on credit with 30% being collected in the month of sales, 50% being collected in the month following the month of sale and the remaining 20% being collected two months after the month of sale. JT has a tight credit policy and, as a result, does not have any bad debts. Tables are hand crafted taking, on average, 5 hours to assemble. Employees are paid $16 per hour and never work overtime. Manufacturing overhead includes all the costs of production other than the cedar and direct labour. The variable component is $25 per table manufactured and the fixed component is $32,000 per month. Fixed manufacturing overhead includes $12,000 of depreciation. Manufacturing overhead is applied to tables on the basis of tables manufactured. JT’s monthly operating expenses are given below: Variable: Sales commissions $20 per table sold Fixed: Wages and salaries $19,000 Utilities 1,700 Insurance 1,500 Depreciation 2,100 Miscellaneous 2,200 All operating expenses are paid in the month for cash, with the exception of depreciation and insurance. Insurance is paid once a year in January ($18,000) then expensed over the entire year. The company plans to purchase some new manufacturing equipment in April for $26,000. JT declares a dividend of $5,000 on the last day of every quarter (i.e. March 31st, June 30th, September 30th and December 31st) and pays it one month later (i.e. the March dividend is paid April 30th, the June dividend is paid July 31st, etc.) The balance sheet at March 31st is given below: Assets Cash $ 25,000 Accounts receivable 92,000 Inventory, red cedar lumber (raw materials) 14,700 Inventory, tables (finished goods) 82,500 Prepaid insurance 13,500 Fixed assets 270,000 Accumulated depreciation (162,000) 108,000 Total Assets 335,700 Liabilities and Shareholder’s Equity Accounts payable, purchases 10,800 Dividends payable 5,000 Capital stock 15,000 Retained earnings 304,900 Total liabilities and shareholder’s equity 335,700 Management believes in keeping a minimum cash balance of $20,000 at the end of each month. The company can borrow from the bank at 12% annual interest. All borrowing must be done at the beginning of the month, and repayments must be done at the end of the month. Borrowings and repayments must also be in increments of $1,000. Interest is paid at the end of each quarter. Round all interest payments to the nearest whole dollar. The company wishes to use any excess cash to pay off the loan as rapidly as possible.

 Required:

 Prepare a Sales Budget, Production Budget, Direct Materials Budget, Direct Labour Budget, Manufacturing Overhead Budget and Sales and Administration Budget. Prepare Schedules of Expected Cash Collections and Expected Cash Disbursements for Materials as well as a Cash Budget. Prepare a Budgeted Income Statement for the Quarter Ended June 30th. Prepare a Budgeted Balance Sheet at June 30th. Use excel to do your work. Use cell references and formulas in your schedules.

Answer rating: 100% (QA)

Cash budget for the second quarter April to June Particulars April May June July August Units sales ... View the full answer