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	190,000

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 70 percent of sales. Payments for merchandise sold are made in the month following the month of sale. Operating expenses total $44,000 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	$Answer	$Answer	$Answer
Total Cash receipts	Answer	Answer	Answer
Cash available	Answer	Answer	Answer
Total disbursements	Answer	Answer	Answer
Cash balance, ending	$Answer	$Answer	$Answer

Answer 1

Cash Collection
	January	February	March	April
Sales	$       3,00,000	$        2,05,000	$       2,00,000	$        1,90,000
Cash Collection are done as below,
60% of the sales is collected in the month of sales	$       1,80,000	$        1,23,000	$       1,20,000	$        1,14,000
40% of the sales is collected in the next month of sales		$        1,20,000	$           82,000	$            80,000
Total Cash Collected	$       1,80,000	$        2,43,000	$       2,02,000	$        1,94,000
Cash Dishburshment
PURCHASES
Sales	$       3,00,000	$        2,05,000	$       2,00,000	$        1,90,000
Cost of Goods Sold is 70% of Sales	$       2,10,000	$        1,43,500	$       1,40,000	$        1,33,000
Payment of purchases is made in next month
So Cash paid of jan is paid in feb , and carry on		$        2,10,000	$       1,43,500	$        1,40,000
paid for operating expenses		$            44,000	$           44,000	$            44,000
Total Cash disburshment		$        2,54,000	$       1,87,500	$        1,84,000
WILSON'S RETAIL COMPANY
CASH BUDGETS	February	March	April
Cash Balance at Beginning	$           40,000	$            29,000	$           43,500
Add: Cash Receipts	$       2,43,000	$        2,02,000	$       1,94,000
Cash Available	$       2,83,000	$        2,31,000	$       2,37,500
Less: Total Disbusements	$       2,54,000	$        1,87,500	$       1,84,000
Cash Balance , Ending	$           29,000	$            43,500	$           53,500