C The Sun Pacific Company budgeted the following sales July2

C.

The Sun Pacific Company budgeted the following sales:

July200,000

August210,000

September190,000

Sales in May were 190,000 and in June 180,000. 60% of sales are cash, 30% of sales are to be collected the next month, and the remaining 10% in 2 months.

Budgeted purchases of the required materials for production are:

July100,000

August105,000

September95,000

Purchases in June were 90,000. 70% of purchases are cash and 30% should be paid the next month.

Direct Labor is 35% of purchases

Selling Expenses are 8% of sales

Other Fixed Expenses are $7,000 monthly

Taxes of $25,000 will be paid in September

Dividends of $20,000 will be paid in August

Sun Pacific has a loan with $100,000 outstanding balance in June

Interest expenses are 1% of the last month outstanding balance

The firm cash policy is to maintain a $25,000 ending cash balance (the ending balance in June was $25,000). Excess should be used to repay loans.

REQUIRED CALCULATE

20. Cash Sales in August

21. Cash receipts in July

22. Cash receipts in September

23. Cash payments in August

24. Cash payments in September

25. Loan outstanding balance in September

26. Interest payment in August

27. Preliminary Cash balance in September

28. Accounts payable for the next period (October)

29. If the company purchase a machine with a cost of $30,000 in September, does the company will need a loan

30. If the answer to 29 is yes, what will be the amount?

Solution

As per policy, only four parts of a question are allowed to answer, so answering 20 - 24,

20. Cash Sales in August = Aug. sales * 60% = 210000 * 60% = $126000

21. Cash receipts in July = Sales * % of receipt = May (190000 * 10%) + June (180000 * 30%) = 19000 + 54000 = $73000

22. Cash receipts in September = July (200000 * 10%) + August (210000 * 30%) = $83000

23. Cash payments in August = Purchases (july 100000*30%) + Purchases (august 105000*70%) + D Labor (105000*35%) + Selling Expenses(210000*8%) + Fixed Exp. $7000 + Dividend $20000 + Interest (100000*1%) = $185050

24. Cash payments in September = Purchases (august 105000*30%) + Purchases (sept. 95000*70%) + D Labor (95000*35%) + Selling Expenses(190000*8%) + Fixed Exp. $7000 + Taxes $25000 + Interest (100000*1%) = $179450

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