In: Accounting
Budget Practice Problem
Bill's Bagels has budgeted the following sales through March (see
below). Bill's sales are expected as follows: cash 40% / credit
(accounts receivable) 60% Sales on credit are expected to be
collected 60% in following month and the other 40 % in the month
after that. Bill will purchase food inventory at 30% of prior
month's sales and desires to have $15,000 in cash available at all
times. Other relevant information is provided below.
Required:
1. Calculate credit sales/cash sales through the end of March
2. Calculate the expected collection on receivables assuming no bad
debt
3. Calculate budgeted cash disbursements through March
4. Calculate the available cash, borrowings or repayments, and the
loan balance through March Bill's Bagels Cash Receipts, Cash
Payments and Cash Budget SALES BUDGET: NOVEMBER DECEMBER JANUARY
FEBRUARY MARCH SALES $ 30,000 $ 40,000 $ 40,000 $ 47,500 $ 60,000
CASH RECEIPTS BUDGET: CREDIT SALES 60% $ 18,000 $ 24,000 $ 24,000
CASH SALES 40% $ 12,000 $ 16,000 $ 16,000 COLLECTION OF
RECEIVABLES: 1 MONTH AFTER SALE 60% $ 14,400 2 MONTHS AFTER SALE
40% $ 7,200 TOTAL BUDGETED CASH RECEIPTS $ 37,600 CASH PAYMENTS
BUDGET Food Purchases 30%of prior month sales $ 12,000 Payroll
Expense 20% $ 8,000 Selling&Admin 15% $ 6,000 Overhead (fixed)
$ 10,000 Estimated Taxes (fixed) $ 5,000 TOTAL BUDGETED CASH
DISBRUSEMENTS $ 41,000 CASH BUDGET JANUARY FEBRUARY MARCH Beginning
Cash Balance $ 15,000 TOTAL BUDGETED CASH RECEIPTS $ 37,600 TOTAL
BUDGETED CASH DISBURSEMENTS $ (41,000) Cash Available $ 11,600
Desired Ending Cash Balance $ 15,000 $ 15,000 $ 15,000 Expected
Borrowing (or Repayment) $ 3,400 Ending Cash Balance $ 15,000 Loan
Balance $ 3,400