Sales are budgeted at $340,000 for November2019, $320,000 for December2019, and $330,000 for January2020. Collections are expected
Question:
Sales are budgeted at $340,000 for November2019, $320,000 for December2019, and $330,000 for January2020.
Collections are expected to be 85% in the month of sale, 14% in the month following the sale, and 1% uncollectible will be recorded as bad debt expense.
The cost of goods sold is 60% of sales.
The company purchases 78% of its merchandise in the month prior to the month of sale and 22% in the month of sale. Payment for inventory is made in the month following the purchase.Depreciation is $20,200per month.
Other monthly expenses to be paid in cash are $18,000.
Other information as at 31 Oct 2019:
Cash$42,000
Accounts receivable (net of allowance for uncollectible accounts)$85,000
Accounts payable$218,000
Ignore taxes.
How to prepare schedule of cash budget, especially for the cash disbursement and ending cash balance?
Expert Answer:
To prepare a schedule of cash budget we need to estimate the cash inflows and cash outflows for each month and calculate the ending cash balance Based ... View the full answer
Managerial Accounting Creating Value in a Dynamic Business Environment
ISBN: 978-0078025662
10th edition
Authors: Ronald Hilton, David Platt
