Question

Castor, Inc., is preparing its master budget for the quarter ended June 30. Budgeted sales and cash payments for merchandise for the next three months follow:

Budgeted	April			May			June
Sales	$	30,000		$	42,000		$	26,000
Cash payments for merchandise		24,200			14,800			13,500

Sales are 80% cash and 20% on credit. All credit sales are collected in the month following the sale. The March 31 balance sheet includes balances of $14,000 in cash, $14,000 in accounts receivable, $11,000 in accounts payable, and a $4,000 balance in loans payable. A minimum cash balance of $14,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning of the month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and include sales commissions (10% of sales), shipping (4% of sales), office salaries ($5,000 per month), and rent ($7,000 per month).

Prepare a cash budget for each of the months of April, May, and June. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.)

I would like to see the details please !

Answer 1

Ans.	Cash budget for the month of April, May and June :
	Particulars			April	May	June
	Opening Balance			14,000	14,000	14,000
	Sale			24,000	33,600	20,800
	Account Receivable			14,000	6,000	8,400
	Total			52,000	53,600	43,200
	Less:
	Payment for Merchandise			24,200	14,800	13,500
	Commission on Sales (10%)			3,000	4,200	2,600
	Shipping Charges (4%)			1,200	1,680	1,040
	Office salaries			5,000	5,000	5,000
	Rent			7,000	7,000	7,000
	Interest on Loan				24
	Total Expenses			40,400	32,704	29,140
	Balance cash			11,600	20,896	14,060
	Add: Loan			2,400
	Less: Repayment of loan				-6,896	-60
	Ending cash balance			14,000	14,000	14,000
	Working Notes:
1)	Calculation of Cash Sale :
	Particulars			April	May	June
	Sale			30,000	42,000	26,000
	Cash sale %			80%	80%	80%
	Cash Sale ($)			24,000	33,600	20,800
2)	Calculation of Credit Sale :
	Particulars			April	May	June
	Sale			30,000	42,000	26,000
	Less: Cash Sale			24,000	33,600	20,800
	Credit Sale			6,000	8,400	5,200
3)	Calculation of cash received from Accounts receivables :
	Particulars			April	May	June
	Opening balance			14,000
	Credit sale			6,000	8,400	5,200
	Cash received			14,000	6,000	8,400
4)	Calculation of Commission on sale :
	Particulars			April	May	June
	Sale			30,000	42,000	26,000
	Cash sale %			10%	10%	10%
	Cash Sale ($)			3,000	4,200	2,600
5)	Calculation of Shipping Charges :
	Particulars			April	May	June
	Sale			30,000	42,000	26,000
	Cash sale %			4%	4%	4%
	Cash Sale ($)			1,200	1,680	1,040