Question

Bench Corporation is a merchandising company that is preparing a cash budget for the third quarter. They have the following budget information available.  

1. Estimated sales for July, August, September, and October will be $210,000, $230,000, $220,000, and $240,000. Accounts receivable from June sales are $136,000. All sales are on credit and collected 35% in the month of sale and 65% in the month following sale.

2. Inventory purchases for July, August, and September are budgeted as $129,600, $136,200, and $135,600. Accounts payable from June purchases are $71,100. All purchases are paid 40% in the month of purchase and 60% in the month following purchase.

3. Monthly SGA expenses are $60,000; $5,000 of which represents depreciation.

4. In August, Bench purchases a machine for $90,000.

5. The July 1 cash balance is $20,000. For debt covenants, Bench must maintain a $10,000 cash balance at month end. The company has access to a revolving line of credit at a 6% annual rate. Borrowing occurs in $5,000 increments at the end of a month and is repaid as soon as possible. Interest is paid when the principal is repaid.

What was the ending cash balance for September?

What was the ending cash balance for the quarter?

What were the total cash receipts for the quarter?

How much interest was paid during the quarter?

Answer 1

What was the ending cash balance for September?

ans- $ 26760

What was the ending cash balance for the quarter?

ans- $ 26760

What were the total cash receipts for the quarter?

ans- $ 653000

How much interest was paid during the quarter?

ans- $ 100

WORKINGS ARE MENTIONED BELOW-

schedule of cash collection		calculation
	july	aug	sep	Quarter	july	aug	sep
from accounts receivable	136000			136000
from july sales	73500	136500		210000	210000*35%	210000*65%
from august sales		80500	149500	230000		230000*35%	230000*65%
from sept sales			77000	77000			220000*35%
Total Cash collection	209500	217000	226500	653000
schedule of cash disbursement for purchases		calculation
	july	aug	sep	Quarter	july	aug	sep
from accounts payable	71100			71100
from july purchases	51840	77760		129600	129600*40%	129600*60%
from aug purchases		54480	81720	136200		136200*40%	136200*60%
from sept purchases			54240	54240			135600*40%
Total Cash collection	122940	132240	135960	391140
Cash Budget
	july	aug	sep	Quarter
Opening Cash Balance	20,000	51,560	11,320	20,000
Add Cash Collections (from 1)	209,500	217,000	226,500	653,000
Total Cash Available	229,500	268,560	237,820	673,000
Less Cash Disbursements
For Inventory (from 2b)	122,940	132,240	135,960	391,140
For machine		90,000		90,000
For SGA (excluding Depreciation)	55,000	55,000	55,000	165,000
Total Cash Disbursements	177,940	277,240	190,960	646,140
Excess (Deficiency of Cash)	51,560	-8,680	46,860	26,860
Additional loan from bank (in $5,000 increments)	0	20000	0	20000
Repayment of loan to bank-
Principal			-20000	-20000
Interest (20000*6%*1/12)			-100	-100
Ending cash balance	51,560	11,320	26,760	26,760