Question

Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2015: April May June Credit sales $ 311,000 $ 291,000 $ 351,000 Credit purchases 119,000 142,000 167,000 Cash disbursements Wages, taxes, and expenses 43,100 10,600 62,100 Interest 10,100 10,100 10,100 Equipment purchases 71,000 132,000 0 The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase. In March 2015, credit sales were $181,000 and credit purchases were $121,000.

Using this information, complete the following cash budget: (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.)

April May June Beginning cash balance $ 114,000 $ $ Cash receipts

Cash collections from credit sales

Total cash available $ $ $

Cash disbursements Purchases $ $ $

Wages, taxes, and expenses Interest

Equipment purchases

Total cash disbursements $ $ $

Ending cash balance $ $ $

Answer 1

Solution:

Computation of cash collection for sales
Particulars	April	May	June
Collection for March Credit Sales	$108,600.00
Collection for April Credit Sales	$108,850.00	$186,600.00
Collection for May Credit Sales		$101,850.00	$174,600.00
Collection for June Credit Sales			$122,850.00
Total Expected cash collection	$217,450.00	$288,450.00	$297,450.00

Nashville Nougats Inc.
Cash Budget
For April to june
Particulars	April	May	June
Beginning Cash Balance	$114,000.00	$86,150.00	$102,900.00
Add: Collections	$217,450.00	$288,450.00	$297,450.00
Total Cash Available	$331,450.00	$374,600.00	$400,350.00
Less: Disbursements:
For inventory purchases	$121,000.00	$119,000.00	$142,000.00
For Wages, taxes and expenses	$43,100.00	$10,600.00	$62,100.00
For Interest	$10,100.00	$10,100.00	$10,100.00
For Equipment Purchases	$71,100.00	$132,000.00	$0.00
Total Disbursements	$245,300.00	$271,700.00	$214,200.00
Ending cash balance	$86,150.00	$102,900.00	$186,150.00