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 were total monthly Selling & Administrative (or SGA) expenses?

How much was paid in cash for Selling & Administration per month?

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

Solution: