• Pet Luggage (PL) does not make any sales on credit. PL sells only to the public and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which PL gets the cash right away, less a 4% transaction fee. 

• Purchases of materials are on account, PL pays for half the purchases in the period of the purchase and the other half in the following period. At the end of March, PL owes suppliers $8,200. During April they plan to purchase direct materials worth $12,310. 

• PL plans to replace a machine in April at a net cash cost of $13,900. 

• Labor, other manufacturing costs, and nonmanufacturing costs are paid in cash in the month incurred except of course depreciation, which is not a cash flow. Depreciation is $24,000 of the manufacturing cost and $12,000 of the nonmanufacturing (foxed) cost for April. 

• PL currently has a $2,300 loan at an annual interest rate of 12%. The interest is paid at the end of each month. If PL has more than $10,000 cash at the end of April it will pay back the loan. PL owes $5,500 in income taxes that need to be remitted in April. PL has cash of $5,800 on hand at the end of March.

Requirements

1.Prepare a cash budget for April for Pet Luggage

Begin the cash budget by calculating the cash available, then total disbursements, and finally the effects of financing and the ending cash balance. (Round your answers to the nearest whole dollar. Enter "0" for repayment of the loan if excess cash does not exceed $10,000 at the end of April.)

2.Why do Pet Luggage’s managers prepare a cash budget in addition to the revenue, expenses, and operating income budget?

Cat-allac Dog-eriffic Total Revenue Budget For the Month of April Units Selling price Total Revenues 500 $ 215 $ 215 320 Manufacturing Overhead Budget For the Month of April $ Machine setup costs Processing costs Inspection costs Total 107,500 68,800 176,300 8,900 42,000 448 51,348