Cash Budget
The controller of Dash Shoes Inc. instructs you to prepare amonthly cash budget for the next three months. You are presentedwith the following budget information:
March April May Sales $148,000 $189,000 $238,000 Manufacturing costs 62,000 81,000 86,000 Selling and administrative expenses 43,000 51,000 52,000 Capitalexpenditures _ _ 57,000
The company expects to sell about 12% of its merchandise forcash. Of sales on account, 65% 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 $10,000 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, 75% 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 $56,000, marketablesecurities of $80,000, and accounts receivable of $171,300($130,000 from February sales and $41,300 from January sales).Sales on account for January and February were $118,000 and$130,000, respectively. Current liabilities as of March 1 include a$74,000, 12%, 90-day note payable due May 20 and $10,000 ofaccounts payable incurred in February for manufacturing costs. Allselling and administrative expenses are paid in cash in the periodthey are incurred. It is expected that $4,400 in dividends will bereceived in March. An estimated income tax payment of $23,000 willbe made in April. Dash Shoes' regular quarterly dividend of $10,000is expected to be declared in April and paid in May. Managementdesires to maintain a minimum cash balance of $44,000.
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 Shoes Inc. Cash Budget For the Three Months Ending May31, 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) $ $ $
2. The budget indicates that the minimum cashbalance be maintained in May. This situation canbe corrected by and/or by the ofthe marketable securities, if they are held for such purposes. Atthe end of March and April, the cash balancewill the minimum desired balance.
Cash Budget
The controller of Dash Shoes Inc. instructs you to prepare amonthly cash budget for the next three months. You are presentedwith the following budget information:
| March | April | May | ||||
| Sales | $148,000 | $189,000 | $238,000 | |||
| Manufacturing costs | 62,000 | 81,000 | 86,000 | |||
| Selling and administrative expenses | 43,000 | 51,000 | 52,000 | |||
| Capitalexpenditures | _ | _ | 57,000 | |||
The company expects to sell about 12% of its merchandise forcash. Of sales on account, 65% 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 $10,000 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, 75% 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 $56,000, marketablesecurities of $80,000, and accounts receivable of $171,300($130,000 from February sales and $41,300 from January sales).Sales on account for January and February were $118,000 and$130,000, respectively. Current liabilities as of March 1 include a$74,000, 12%, 90-day note payable due May 20 and $10,000 ofaccounts payable incurred in February for manufacturing costs. Allselling and administrative expenses are paid in cash in the periodthey are incurred. It is expected that $4,400 in dividends will bereceived in March. An estimated income tax payment of $23,000 willbe made in April. Dash Shoes' regular quarterly dividend of $10,000is expected to be declared in April and paid in May. Managementdesires to maintain a minimum cash balance of $44,000.
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 Shoes Inc. | |||
| Cash Budget | |||
| For the Three Months Ending May31, 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) | $ | $ | $ |
2. The budget indicates that the minimum cashbalance be maintained in May. This situation canbe corrected by and/or by the ofthe marketable securities, if they are held for such purposes. Atthe end of March and April, the cash balancewill the minimum desired balance.
Related questions
The controller of Dash Shoes Inc. instructs you to prepare amonthly cash budget for the next three months. You are presentedwith the following budget information:
| March | April | May | ||||
| Sales | $141,000 | $171,000 | $224,000 | |||
| Manufacturing costs | 59,000 | 74,000 | 81,000 | |||
| Selling and administrativeexpenses | 41,000 | 46,000 | 49,000 | |||
| Capital expenditures | _ | _ | 54,000 | |||
The company expects to sell about 15% of its merchandise forcash. Of sales on account, 70% 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 $8,000 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, 75% 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 $54,000, marketablesecurities of $76,000, and accounts receivable of $156,900($123,000 from February sales and $33,900 from January sales).Sales on account for January and February were $113,000 and$123,000, respectively. Current liabilities as of March 1 include a$71,000, 12%, 90-day note payable due May 20 and $8,000 of accountspayable incurred in February for manufacturing costs. All sellingand administrative expenses are paid in cash in the period they areincurred. It is expected that $4,200 in dividends will be receivedin March. An estimated income tax payment of $21,000 will be madein April. Dash Shoes' regular quarterly dividend of $8,000 isexpected to be declared in April and paid in May. Managementdesires to maintain a minimum cash balance of $42,000.
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.
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Need to know the steps to find the Manufacturing Costs andSelling and Administraive Expenses
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 budget information:
| March | April | May | ||||
| Sales | $114,000 | $146,000 | $187,000 | |||
| Manufacturing costs | 48,000 | 63,000 | 67,000 | |||
| Selling and administrative expenses | 33,000 | 39,000 | 41,000 | |||
| Capital expenditures | _ | _ | 45,000 | |||
The company expects to sell about 15% of its merchandise forcash. Of sales on account, 65% 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 $43,000, marketablesecurities of $62,000, and accounts receivable of $131,850($100,000 from February sales and $31,850 from January sales).Sales on account for January and February were $91,000 and$100,000, respectively. Current liabilities as of March 1 include a$57,000, 12%, 90-day note payable due May 20 and $6,000 of accountspayable incurred in February for manufacturing costs. All sellingand administrative expenses are paid in cash in the period they areincurred. It is expected that $3,400 in dividends will be receivedin March. An estimated income tax payment of $18,000 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 $34,000.
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 Shoes Inc. | |||
| Cash Budget | |||
| For the Three Months 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) | $ | $ | $ |
2. The budget indicates that the minimum cashbalance be maintained in May. This situation can be corrected byand/or by the of the marketable securities, if they are held forsuch purposes. At the end of March and April, the cash balance willthe minimum desired balance.
