Question

Use the following information to prepare the July cash budget for Acco Co. It should show expected cash receipts and cash payments for the month and the cash balance expected on July 31.

1. Beginning cash balance on July 1: $68,000.
2. Cash receipts from sales: 20% is collected in the month of sale, 50% in the next month, and 30% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are May (actual), $1,800,000; June (actual), $1,470,000; and July (budgeted), $1,470,000.
3. Payments on merchandise purchases: 55% in the month of purchase and 45% in the month following purchase. Purchases amounts are: June (actual), $550,000; and July (budgeted), $620,000.
4. Budgeted cash payments for salaries in July: $250,000.
5. Budgeted depreciation expense for July: $13,000.
6. Other cash expenses budgeted for July: $200,000.
7. Accrued income taxes due in July: $100,000.
8. Bank loan interest paid in July: $6,500.

Answer 1

Cash budgeted statement were as follows:

Cash Budget
For the month of July Month
Particulars	Amount
Beginning Balance as on 1st July	68,000
Add :
Collection on May Month Sale	540,000
Collection on June Month Sale	735,000
Collection on July Month Sale	294,000
	1,637,000
Less:
Payment on June Month Purchase	(247,500)
Payment on July Month Purchase	(341,000)
Cash Payment on Salaries	(250,000)
Cash Payment on Other Expenses	(200,000)
	598,500

Workings were as follows

Particulars	Amount	Percentage of Collection on July	Amount of Collection in July
May Sales	1,800,000	30%	540,000
June Sales	1,470,000	50%	735,000
July sales	1,470,000	20%	294,000
June Purchase	550,000	45%	247,500
July Purchase	620,000	55%	341,000
Salaries			250,000
Other Cash Expense			200,000

Depreciation is non cash expenditure will not affect cash balance

Accrured income tax is not paid yet. So not affect the cash transactions

Bank loan interest is banking transaction and question didnt mention that cash deposit is done for the transaction. So this is too ommitt from the statement.