The controller of Dash Shoes Inc. instructs you to prepare amonthly cash budget for the next three months. You are presentedwith the following budgetinformation:
March April May Sales $111,000 $135,000 $182,000 Manufacturing costs 47,000 58,000 66,000 Selling and administrative expenses 32,000 36,000 40,000 Capital expenditures _ _ 44,000
The company expects to sell about 12% of its merchandise forcash. Of sales on account, 60% are expected to be collected in themonth following the sale and the remainder the following month(second month following sale). Depreciation, insurance, andproperty tax expense represent $6,000 of the estimated monthlymanufacturing costs. The annual insurance premium is paid in July,and the annual property taxes are paid in November. Of theremainder of the manufacturing costs, 80% are expected to be paidin the month in which they are incurred and the balance in thefollowing month.
Current assets as of March 1 include cash of $42,000, marketablesecurities of $60,000, and accounts receivable of $132,600 ($97,000from February sales and $35,600 from January sales). Sales onaccount for January and February were $89,000 and $97,000,respectively. Current liabilities as of March 1 include a $56,000,12%, 90-day note payable due May 20 and $6,000 of accounts payableincurred in February for manufacturing costs. All selling andadministrative expenses are paid in cash in the period they areincurred. It is expected that $3,300 in dividends will be receivedin March. An estimated income tax payment of $16,000 will be madein April. Dash Shoes' regular quarterly dividend of $6,000 isexpected to be declared in April and paid in May. Managementdesires to maintain a minimum cash balance of $33,000.
Required:
1. Prepare a monthly cash budget and supportingschedules for March, April, and May. Input all amounts as positivevalues except overall cash decrease and deficiency which should beindicated with a minus sign. Assume 360 days per year for interestcalculations.
Dash ShoesInc. CashBudget For the ThreeMonths Ending May 31, 2016 March April May Estimated cash receipts from: Cash sales $ $ $ Collection of accounts receivable Dividends Total cash receipts $ $ $ Estimated cash payments for: Manufacturing costs $ $ $ Selling and administrative expenses Capital expenditures Other purposes: Note payable (including interest) Income tax Dividends Total cash payments $ $ $ Cash increase or (decrease) $ $ $ Cash balance at beginning of month Cash balance at end of month $ $ $ Minimum cash balance Excess or (deficiency) $ $ $
The controller of Dash Shoes Inc. instructs you to prepare amonthly cash budget for the next three months. You are presentedwith the following budgetinformation:
March | April | May | ||||
Sales | $111,000 | $135,000 | $182,000 | |||
Manufacturing costs | 47,000 | 58,000 | 66,000 | |||
Selling and administrative expenses | 32,000 | 36,000 | 40,000 | |||
Capital expenditures | _ | _ | 44,000 |
The company expects to sell about 12% of its merchandise forcash. Of sales on account, 60% are expected to be collected in themonth following the sale and the remainder the following month(second month following sale). Depreciation, insurance, andproperty tax expense represent $6,000 of the estimated monthlymanufacturing costs. The annual insurance premium is paid in July,and the annual property taxes are paid in November. Of theremainder of the manufacturing costs, 80% are expected to be paidin the month in which they are incurred and the balance in thefollowing month.
Current assets as of March 1 include cash of $42,000, marketablesecurities of $60,000, and accounts receivable of $132,600 ($97,000from February sales and $35,600 from January sales). Sales onaccount for January and February were $89,000 and $97,000,respectively. Current liabilities as of March 1 include a $56,000,12%, 90-day note payable due May 20 and $6,000 of accounts payableincurred in February for manufacturing costs. All selling andadministrative expenses are paid in cash in the period they areincurred. It is expected that $3,300 in dividends will be receivedin March. An estimated income tax payment of $16,000 will be madein April. Dash Shoes' regular quarterly dividend of $6,000 isexpected to be declared in April and paid in May. Managementdesires to maintain a minimum cash balance of $33,000.
Required:
1. Prepare a monthly cash budget and supportingschedules for March, April, and May. Input all amounts as positivevalues except overall cash decrease and deficiency which should beindicated with a minus sign. Assume 360 days per year for interestcalculations.
Dash ShoesInc. | |||
CashBudget | |||
For the ThreeMonths Ending May 31, 2016 | |||
March | April | May | |
Estimated cash receipts from: | |||
Cash sales | $ | $ | $ |
Collection of accounts receivable | |||
Dividends | |||
Total cash receipts | $ | $ | $ |
Estimated cash payments for: | |||
Manufacturing costs | $ | $ | $ |
Selling and administrative expenses | |||
Capital expenditures | |||
Other purposes: | |||
Note payable (including interest) | |||
Income tax | |||
Dividends | |||
Total cash payments | $ | $ | $ |
Cash increase or (decrease) | $ | $ | $ |
Cash balance at beginning of month | |||
Cash balance at end of month | $ | $ | $ |
Minimum cash balance | |||
Excess or (deficiency) | $ | $ | $ |