In: Accounting
Required information
[The following information applies to the questions
displayed below.]
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 | $ | 57,000 | $ | 73,000 | $ | 55,000 | |||
Budgeted cash payments for | |||||||||
Direct materials | 15,760 | 13,040 | 13,360 | ||||||
Direct labor | 3,640 | 2,960 | 3,040 | ||||||
Factory overhead | 19,800 | 16,400 | 16,800 | ||||||
Sales are 20% cash and 80% 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; $44,600 in accounts
receivable; and a $4,600 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 ($3,600 per month), and rent ($6,100 per
month).
Required information
[The following information applies to the questions
displayed below.]
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 | $ | 57,000 | $ | 73,000 | $ | 55,000 | |||
Budgeted cash payments for | |||||||||
Direct materials | 15,760 | 13,040 | 13,360 | ||||||
Direct labor | 3,640 | 2,960 | 3,040 | ||||||
Factory overhead | 19,800 | 16,400 | 16,800 | ||||||
Sales are 20% cash and 80% 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; $44,600 in accounts
receivable; and a $4,600 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 ($3,600 per month), and rent ($6,100 per
month).
(1) Prepare a cash receipts budget for July,
August, and September.
(2) Prepare a cash budget for each of the months of July, August, and September.