Question

Cash Budget
Wilson's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows:

Month	Sales Revenue	Month	Sales Revenue
January	$300,000	March	$200,000
February	205,000	April	185,000

All sales are on credit; 60 percent is collected during the month of sale, and 40 percent is collected during the next month. Cost of goods sold is 80 percent of sales. Payments for merchandise sold are made in the month following the month of sale. Operating expenses total $41,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $40,000.

Prepare monthly cash budgets for February, March, and April.

Use negative signs only with beginning and ending cash balances, when appropriate. Do not use negative signs with disbursement answers.

Wilson's Retail Company Cash Budgets February, March, and April
	February	March	April
Cash balance, beginning
Total Cash receipts
Cash available
Total disbursements
Cash balance, ending

Answer 1

Wilson Retail Company
Cash Budgets
	February	March	April
Cash balance beginning	40,000	2,000	-1,000
Total cash receipts	2,43,000	2,02,000	1,91,000
Cash available	2,83,000	2,04,000	1,90,000
total disbursements	2,81,000	2,05,000	2,01,000
Cash balance ending	2,000	-1,000	-11,000

Total cash receipts

($205,000 * 60%)+($300,000*40%) = $243,000

($205,000 * 40%)+ ($200,000 * 60%) = $202,000

($185,000 * 60%)+ ($200,000 * 40%) = $191,000

total disbursements

$41,000 + ($300,000 * 80%) = $281,000

$41,000 + ($205,000 * 80%) = $205,000

$41,000 + ($200,000 * 80%) = $201,000