Prepare the estimated cash receipts and disbursements section of a cash budget (not including the financing section) for October 2011 for the Botanica Company, which sells one product, herbal soap, by the case. On October 1, 2011, part of the trial balance showed 

The company pays for its purchases within 10 days of purchase, so assume that one-third of the purchases of any month are due and paid for in the following month. 

The cost of the merchandise purchased is $12 per case. At the end of each month, it is desired to have an inventory equal in units to 50 percent of the following month’s sales in units. 

Sales terms include a 1 percent discount if payment is made by the end of the calendar month. Past experience indicates that 60 percent of sales will be collected during the month of the sale, 30 percent in the following calendar month, 6 percent in the next following calendar month, and the remaining 4 percent will be uncollectible. The company’s fiscal year begins August 1. 

Exclusive of bad debts, total budgeted selling and general administrative expenses for the fiscal year are estimated at $61,500, of which $24,000 is fixed expense (which includes a $13,200 annual depreciation charge). The Botanica Company incurs these fixed expenses uniformly throughout the year. The balance of the selling and general administrative expenses varies with sales. Expenses are paid as incurred.

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Excel Spreadsheet Template DR CR $ 4,800 15,600 Cash Accounts receivable $1,900 Allowance for bad debts Merchandise inventory 9,000 Accounts payable, merchandise 6,600 Unit selling price $20 $ 12,000 August actual sales September actual sales 36,000 October estimated sales 30,000 November estimated sales 22,000 Total sales expected in the fiscal year $360,000