Question

Company X has the following income statement for the month ending September.

Sales                                                                42,000

Cost of Goods Sold:                                          

Beginning Inventory                                         6,000

Purchases                                                        37,800

Cost of Goods Available for sale                    43,800

Less: Ending Inventory                                  (14,400)

Cost of Goods Sold                                        29,400             

Gross Profit                                                    12,600

Operating Expenses                                        10,500

Operating Profit                                              2,100

Sales are made on credit and collected as follows:

60 per cent in the month after the sale is made and

35 per cent in the second month after the sale

Purchases and Operating Expenses are paid as follows:

80 per cent purchased or the cost incurred

Cash on hand at 31 August is estimated to be $40,000.  Collections of 31 August accounts receivable was estimated to be $24,000 and payments of accounts payable to be $34,000.

Prepare a cash budget for September

Answer 1

Schedule of Expected Cash Collections from Sales
	Sep.
Collection from Accounts Receivables
Accounts Receivables - August	24,000.00
Sep Sales	-
Total cash Collections	24,000.00
Schedule of Cash payments for Purchases & Operating Expenses
	Sep.
Cash Payment
Accounts Payable - August	34,000.00
Sep Purchases - $37,800 X 80%	30,240.00
Operating Expenses - $10,500 X 80%	8,400.00
Total Cash Payment to Suppliers	72,640.00
Cash budget
	Sep
Opening cash Balance	40,000.00
Add: receipts
Collection from Customers	24,000.00
Total Cash available	64,000.00
Less: Disbursements
Cash Disbursement - Accounts Payable & Operating Exp.	72,640.00
Total Disbursement	72,640.00
Cash Balance Closing	(8,640.00)