Question

Built-Tight is preparing its master budget for the quarter ended September 30, 2017. Budgeted sales and cash payments for product costs for the quarter follow:

	July			August			September
Budgeted sales	$	62,500		$	78,500		$	49,500
Budgeted cash payments for
Direct materials		16,460			13,740			14,060
Direct labor		4,340			3,660			3,740
Factory overhead		20,500			17,100			17,500

Sales are 25% cash and 75% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,300 in accounts receivable; $4,800 in accounts payable; and a $5,300 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,300 per month), and rent ($6,800 per month).

BUILT-TIGHT Cash Budget For July, August, and September July August September Beginning cash balance Cash receipts from customers Total cash available 75,925 81,500 Cash payments for: Direct labor Direct materials Interest on bank loan Office salaries Overhead Rent Sales commissions Total cash payments 20,800 20,760 21,240 Preliminary cash balance Additional loan (loan repayment) Ending cash balance 0 0 0 Loan balance July August September Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month

Answer 1

	July	August	September
Beginning cash balance	15,000	15,000	24,941
Cash receipts from customers	60,925	66,500	71,250
Total cash available	75,925	81,500	96,191
Cash payments for:
Direct labor	4,340	3,660	3,740
Direct materials	16,460	13,740	14,060
Interest on bank loan	53	31	-
Office salaries	4,300	4,300	4,300
Overhead	20,500	17,100	17,500
Rent	6,800	6,800	6,800
Sales commissions	6,250	7,850	4,950
Total cash payments	58,703	53,481	51,350
Preliminary cash balance	15,000	15,000	15,000
Additional loan (loan repayment)	(2,222)	(3,078)	-
Ending cash balance	15,000	24,941	44,841

Calculation of cash receipts from customers:

	July	August	September
Cash Sales 25%	15,625	19,625	12,375
Credit Sales collected in subsequent month	45,300	46,875	58,875
Total Collection	60,925	66,500	71,250

oan balance
	July	August		September
Loan balance - Beginning of month	5,300	3,078		0
Additional loan (loan repayment)	(2,222)	(3,078)		0
Loan balance - End of month	3,078	0		0

Since no information has been given regarding payment of accounts payables, it has been assumed that it was not paid.