In: Accounting
Ojai Products, a distributor of organic beverages, needs a cash budget for September. The following information is available:
a. | The cash balance at the beginning of September is $12,900. |
b. | Actual sales for July and August and expected sales for September are as follows: |
July | August | September | ||||
Cash sales | $ | 6,300 | $ | 4,300 | $ | 9,700 |
Sales on account | 21,100 | 26,100 | 37,100 | |||
Total sales | 27,400 | 30,400 | 46,800 | |||
Sales on account are collected over a three-month period as follows: 10% collected in the month of sale, 65% collected in the month following sale, and 21% collected in the second month following sale. The remaining 4% is uncollectible. |
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c. |
Purchases of inventory will total $24,800 for September. Thirty percent of a month's inventory purchases are paid for during the month of purchase. The accounts payable remaining from August's inventory purchases total $15,800, all of which will be paid in September. |
d. |
Selling and administrative expenses are budgeted at $14,100 for September. Of this amount, $4,100 is for depreciation. |
e. |
Equipment costing $18,200 will be purchased for cash during September, and dividends totaling $3,900 will be paid during the month. |
f. |
The company maintains a minimum cash balance of $8,900. An open line of credit is available from the company’s bank to bolster the cash balance as needed. |
Required: | |||||||
1. |
Prepare a schedule of expected cash collections for September. (Do not round intermediate calculations.)
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Schedule for Expected Cash Collection | ||
July | August | |
Cash Sale | 6,300 | 4,300 |
Collected from July Credit Sale | 2110 | 13715 |
Collected from August Credit Sale | 2610 | |
Collected from September Credit Sale | ||
Total cash Collection in September month | ||
Schedule for Expected Cash Disbursement | ||
Purchase During the month of September | 24,800 | |
Payment: | ||
Cash Payment for current month purchase | 7,440 | |
Payment for August month Purchase | 15,800 | |
Total Cash Disbursement for September Month | 23,240 | |
Cash Budget | Amt. | |
Opening Balance | 12900 | |
Cash Collection During the month | 34,806 | |
Total Cash Avilable | 47,706 | |
Less: Disbursement | ||
For Inventory Purchase | 23,240 | |
Selling And administrative Expenses (14100-4100) | 10,000 | |
Equipment Purchase | 18,200 | |
Dividend Paid | 3,900 | |
Total Cash Disbursement | 55,340 | |
Net Cash | -7,634 | |
Add: Cash From Loan | 16,534 | |
Cash Balance at end | 8,900 |