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Required information [The following information applies to the questions displayed below.] Built-Tight is preparing its master...

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.

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