Question

Budgeting Cash Flow
The following various elements relate to Whitfield, Inc.’s cash budget for April of the current year. For each item, determine the amount of cash that Whitfield should receive or pay in April.

a. At $28 each, unit sales are 5,000 and 6,000 for March and April, respectively. Total sales are typically 40% for cash and 60% on credit; 30% of credit sales are collected in the month of sale, with the balance collected in the following month. Uncollectible accounts are negligible.

March sales= Answer

April cash sales= Answer

April credit sales= Answer

Cash collected in April =Answer

b. Merchandise purchases were $45,000 and $78,000 for March and April, respectively. Typically, 20% of total purchases are paid for in the month of purchase with a 5% cash discount. The balance of purchases is paid for (without discount) in the following month.

Marchpurchases	Answer
Aprilpurchases	Answer
Cash paid in April	Answer

c. Fixed administrative expenses, which total $11,000 per month, are paid in the month incurred. Variable administrative expenses amount to 20% of total monthly sales revenue, one-half of which is paid in the month incurred, with the balance paid in the following month.

April fixed expenses	Answer
March variable expenses	Answer
April variable expenses	Answer
Cash paid in April	Answer

d. A store asset originally costing $8,000, on which $6,000 depreciation has been taken, is sold for cash at a loss of $400.

$Answer

Answer 1

Question A

Particulars	March	April
Units Sales	5,000	6,000
* Sales Price per Unit	28	28
Budgeted Sales Revenue	140,000	168,000

For April

Cash Sales = 40% of April Sales

April Sales = $ 168,000

Cash Sales = 40% of $ 168,000

Cash Sales = $ 67,200

Credit Sales for April = 60% of April Sales

April Sales = $ 168,000

Credit Sales = 60% of $ 168,000

Credit Sales = $ 100,800

Cash Collection in April

Particulars	Amount
April Cash Sales	67,200
Add:Collection of March Credit Sales	58,800
Add:CollectionCollection of April Credit Sales	30,240
Total Cash Collection for April	156,240

Notes:-

Collection of April Credit Sales = 30% of April Credit Sales

= 30% of $ 100,800

= $ 30,240

Collection of March Credit Sales in April = 70% of March Credit Sales

= 70% of $ 84,000

= $ 58,800

April Credit Sales = 60% of April Sales

= 60% of $ 140,000

= $ 84,000

Question B

Particulars	Amount
Payment of March Purchases	36,000
Add:Payment of April Purchases	14,820
Total Cash Payments in April	50,820

Payment of March Payment = 80% of March Purchases

= 80% of 45,000

= $ 36,000

Payment of April Cash Payment = 20% of April Purchases

= 20% of 78,000

= $ 15,600

Payment for April Cash Purchases = 15,600 - 5% Cash Discount

= 15,600 - 780

= $ 14,820

Cash Discount = 5% of 15,600

= $ 780

Question C

Particulars	Amount
April Fixed Expenses	11,000
Add:March Variable Expenses	14,000
Add:April Variable Expenses	16,800
Cash Paid in April	41,800

March Variable Expenses = 50% of March Variable Expenses

= 50% of $ 28,000

= $ 14,000

April Variable Expenses= 50% of April Variable Expenses

= 50% of $ 33,600

= $ 16,800

Particulars	March	April
Sales Revenue	140,000	168,000
* % of Variable Expenses	20%	20%
Variable Expenses	28,000	33,600

Question D

Sale Price of Asset = Book Value of Asset - Loss on Sale of Asset

Sale Price of Asset = 2,000 - 400

Sale Price of Asset = $ 1,600

Cash Received on Sales = $ 1,600

Book Value of Asset = Purchase Price of Asset - Accumulated Depreciation / Depreciation Taken on Asset

Book Value of Asset = 8,000 - 6,000

Book Value of Asset = $ 2,000