370 I search ebook go book contents g0 PROBLEM 912 Schedules

-370. I )???search ebook go book contents g0 PROBLEM 9-12 Schedules of Expected Cash Collections and Disbursements [LO2] Problem 9-12: Connect Animation Click here to view the Transcript Calgon 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 $9,000. b. Actual sales for July and August and expected sales for September are as shown below. Sales on account are collected over a three-month period as follows: 10% collected in the month of sale, 70% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible; July August September 6500 $7400 40000 5250 Sales on acca Sales an accaunt $26500550 c. Purchases of inventory will total $25,000 for September. Twenty 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 $16,000, all of which will be paid in September. d. Selling and administrative expenses are budgeted at $13,000 for September. Of this amount, e. Equipment costing $18,000 will be purchased for cash during September, and dividends f. The company maintains a minimum cash balance of $5,000. An open line of credit is available $4,000 is for depreciation. totalling $3,000 will be paid during the month from the company\'s bank to bolster the cash position as needed. Assume any borrowings occur at the beginning of the month and repayments occur at the end of the month. Interest orn outstanding loan balances during the month must be paid at the end of each month. The monthly interest rate is 0.5%. Required 1. 2. 3. Prepare a schedule of expected cash collections for September Prepare a schedule of expected cash disbursements during September for inventory purchases. Prepare a cash budget for September. Indicate in the financing section any borrowing that will be needed during September

Solution

1) Schedule of expected cash collections - September

September Cash Sales

$7,400

September Collections on accounts

Sales- July ($20,000 * 18%)

3,600

Sales - August ($30,000 * 70%)

21,000

Sales - September sales ($40,000 * 10%)

4,000

$28,600

Total Cash Collections

$36,000

2) Schedule of expected cash disbursements for inventory purchases - September

Payment of Supplies

Purchase - August (accounts payable)

$16,000

Purchase - September ($25,000 * 20%)

$5,000

Total cash payments

$21,000

3) Cash Budget - m/o September

\'

Cash balance as on September 1

$9,000

Plus: Cash receipts

Collections from customers

$36,000

Total cash available before current financing

$45,000

Minus: Disbursements

Payments to inventory suppliers

21,000

Purchase of equipment

18,000

Selling and administrative expenses (*$13,000 - $4,000 = $9,000)

9,000

Dividends paid

3,000

Total disbursements

$51,000

Excess / Deficiency of available cash

Excess disbursement

-$6,000

Financing

Borrowings

$11,000

Repayments

$0

Interest

$0

Total amount

$11,000

Cash balance as on September 30

$5,000

September Cash Sales		$7,400
September Collections on accounts
Sales- July ($20,000 * 18%)	3,600
Sales - August ($30,000 * 70%)	21,000
Sales - September sales ($40,000 * 10%)	4,000	$28,600
Total Cash Collections		$36,000