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In: Accounting
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...
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The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:
September October November Sales $106,000 $133,000 $175,000 Manufacturing costs 45,000 57,000 63,000 Selling and administrative expenses 37,000 40,000 67,000 Capital expenditures _ _ 42,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $6,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.
Current assets as of September 1 include cash of $40,000, marketable securities of $57,000, and accounts receivable of $118,500 ($93,000 from July sales and $25,500 from August sales). Sales on account for July and August were $85,000 and $93,000, respectively. Current liabilities as of September 1 include $6,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $16,000 will be made in October. Bridgeport’s regular quarterly dividend of $6,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $39,000.
Required:
1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign. Assume 360 days per year for interest calculations.
Bridgeport Housewares Inc. Cash Budget For the Three Months Ending November 30 September October November Estimated cash receipts from: $ $ $ Total cash receipts $ $ $ Less estimated cash payments for: $ $ $ Other purposes: Total cash payments $ $ $ $ $ $ Cash balance at end of month $ $ $ Excess or (deficiency) $ $ $ 2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
The budget indicates that the minimum cash balance be maintained in November. This situation can be corrected by and/or by the of the marketable securities, if they are held for such purposes. At the end of September and October, the cash balance will the minimum desired balance.
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| Bridgeport Housewares | |||||||
| Sales Budget | July | August | September | October | November | Total | Note |
| Sales Budget | 106,000.00 | 133,000.00 | 175,000.00 | 414,000.00 | A | ||
| 10% cash sales | 10,600.00 | 13,300.00 | 17,500.00 | 41,400.00 | B=A*10% | ||
| 90% credit sales | 93,000.00 | 25,500.00 | 95,400.00 | 119,700.00 | 157,500.00 | 372,600.00 | C=A-B |
| Collection of accounts receivable | Sales on account | Percentage | September | October | November | Total |
| July Sales | 93,000.00 | 100% | 93,000.00 | 93,000.00 | ||
| August Sales | ||||||
| Collected in September | 25,500.00 | 70% | 17,850.00 | 17,850.00 | ||
| Collected in October | 25,500.00 | 30% | 7,650.00 | 7,650.00 | ||
| September Sales | ||||||
| Collected in October | 95,400.00 | 70% | 66,780.00 | 66,780.00 | ||
| Collected in November | 95,400.00 | 30% | 28,620.00 | 28,620.00 | ||
| October Sales | 119,700.00 | 70% | 83,790.00 | 83,790.00 | ||
| Totals | 110,850.00 | 74,430.00 | 112,410.00 | 297,690.00 |
| Payment of manufacturing costs | Account | Percentage | Payments |
| Paid in September | |||
| Incurred in August | 6,000.00 | ||
| Incurred in September | 39,000.00 | 80% | 31,200.00 |
| Total | 37,200.00 | ||
| Paid in October | |||
| Incurred in September | 39,000.00 | 20% | 7,800.00 |
| Incurred in October | 51,000.00 | 80% | 40,800.00 |
| Total | 48,600.00 | ||
| Paid in November | |||
| Incurred in October | 51,000.00 | 20% | 10,200.00 |
| Incurred in November | 57,000.00 | 80% | 45,600.00 |
| Total | 55,800.00 | ||
| Answer 1- Cash budget | September | October | November |
| Expected cash receipts from: | |||
| Cash sales | 10,600.00 | 13,300.00 | 17,500.00 |
| Collection of accounts receivable | 110,850.00 | 74,430.00 | 112,410.00 |
| Total Cash Receipts | 121,450.00 | 87,730.00 | 129,910.00 |
| Less: Estimated cash payments for | |||
| Manufacturing costs | 37,200.00 | 48,600.00 | 55,800.00 |
| Selling and admin | 37,000.00 | 40,000.00 | 67,000.00 |
| Capital expenditures | - | - | 42,000.00 |
| Other purposes | |||
| Income Tax | - | 16,000.00 | - |
| Dividends | - | - | 6,000.00 |
| Total cash payments | 74,200.00 | 104,600.00 | 170,800.00 |
| Cash increase or (decrease) | 47,250.00 | (16,870.00) | (40,890.00) |
| Cash Balance at the beginning of month | 40,000.00 | 87,250.00 | 70,380.00 |
| Cash Balance at the end of month | 87,250.00 | 70,380.00 | 29,490.00 |
| Minimum cash balance | (50,000.00) | (50,000.00) |
(50,000.00)
 ekkarill92 answered 2 years agoRelated SolutionsThe controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...The controller of Bridgeport Housewares Inc. instructs you to
prepare a monthly cash budget for the next three months. You are
presented with the following budget information:
September October November
Sales $117,000 $140,000 $199,000
Manufacturing costs 49,000 60,000 72,000
Selling and administrative expenses 41,000 42,000 76,000
Capital expenditures _ _ 48,000
The company expects to sell about 10% of its merchandise for cash.
Of sales on account, 70% are expected to be collected in the month
following the sale and...
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...The controller of Bridgeport Housewares Inc. instructs you to
prepare a monthly cash budget for the next three months. You are
presented with the following budget information:
September
October
November
Sales
$92,000
$109,000
$145,000
Manufacturing costs
39,000
47,000
52,000
Selling and administrative expenses
32,000
33,000
55,000
Capital expenditures
_
_
35,000
The company expects to sell about 10% of its merchandise for
cash. Of sales on account, 70% are expected to be collected in the
month following the sale and...
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...The controller of Bridgeport Housewares Inc. instructs you to
prepare a monthly cash budget for the next three months. You are
presented with the following budgetinformation:
September
October
November
Sales
$119,000
$140,000
$194,000
Manufacturing costs
50,000
60,000
70,000
Selling and administrative expenses
42,000
42,000
74,000
Capital expenditures
_
_
47,000
The company expects to sell about 10% of its merchandise for
cash. Of sales on account, 70% are expected to be collected in the
month following the sale and the...
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...The controller of Bridgeport Housewares Inc. instructs you to
prepare a monthly cash budget for the next three months. You are
presented with the following budget information:
September
October
November
Sales
$91,000
$112,000
$144,000
Manufacturing costs
38,000
48,000
52,000
Selling and administrative expenses
32,000
34,000
55,000
Capital expenditures
_
_
35,000
The company expects to sell about 10% of its merchandise for
cash. Of sales on account, 70% are expected to be collected in the
month following the sale and...
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...The controller of Bridgeport Housewares Inc. instructs you to
prepare a monthly cash budget for the next three months. You are
presented with the following budget information:
September
October
November
Sales
$106,000
$126,000
$175,000
Manufacturing costs
45,000
54,000
63,000
Selling and administrative expenses
37,000
38,000
67,000
Capital expenditures
_
_
42,000
The company expects to sell about 10% of its merchandise for
cash. Of sales on account, 70% are expected to be collected in the
month following the sale and...
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...The controller of Bridgeport Housewares Inc. instructs you to
prepare a monthly cash budget for the next three months. You are
presented with the following budget information: September October
November Sales $145,000 $181,000 $232,000 Manufacturing costs
61,000 78,000 84,000 Selling and administrative expenses 51,000
54,000 88,000 Capital expenditures _ _ 56,000 The company expects
to sell about 10% of its merchandise for cash. Of sales on account,
70% are expected to be collected in the month following the sale
and...
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...The controller of Bridgeport Housewares Inc. instructs you to
prepare a monthly cash budget for the next three months. You are
presented with the following budget information:
September
October
November
Sales
$125,000
$149,000
$199,000
Manufacturing costs
53,000
64,000
72,000
Selling and administrative expenses
44,000
45,000
76,000
Capital expenditures
_
_
48,000
The company expects to sell about 10% of its merchandise for
cash. Of sales on account, 70% are expected to be collected in the
month following the sale and...
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...The controller of Bridgeport Housewares Inc. instructs you to
prepare a monthly cash budget for the next three months. You are
presented with the following budget information:
September
October
November
Sales
$250,000
$300,000
$315,000
Manufacturing costs
150,000
180,000
185,000
Selling and administrative expenses
42,000
48,000
51,000
Capital expenditures
_
_
200,000
The company expects to sell about 10% of its merchandise for
cash. Of sales on account, 70% are expected to be collected in the
month following the sale and...
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...
The controller of Bridgeport Housewares Inc. instructs you to
prepare a monthly cash budget for the next three months. You are
presented with the following budget information:
September
October
November
Sales
$121,000
$155,000
$207,000
Manufacturing costs
51,000
67,000
75,000
Selling and administrative expenses
42,000
47,000
79,000
Capital expenditures
_
_
50,000
The company expects to sell about 10% of its merchandise for
cash. Of sales on account, 70% are expected to be collected in the
month following the sale and...
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...The controller of Bridgeport Housewares Inc. instructs you to
prepare a monthly cash budget for the next three months. You are
presented with the following budgetinformation:
September
October
November
Sales
$137,000
$170,000
$219,000
Manufacturing costs
58,000
73,000
79,000
Selling and administrative expenses
48,000
51,000
83,000
Capital expenditures
_
_
53,000
The company expects to sell about 10% of its merchandise for
cash. Of sales on account, 70% are expected to be collected in the
month following the sale and the...
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