I already have the question completed to my best ability, but am just looking for someone to double check it.
Here’s the question again in case it didn’t go through on the little bar above, and my answer is posted below:
The treasurer of Unisyms Company has accumulated the following budget information for the first two months of the coming year:
|
March |
April |
|
| Sales. |
$450,000 |
$520,000 |
| Manufacturing costs |
290,000 |
350,000 |
| Selling and administrative | ||
| expenses |
41,400 |
46,400 |
| Capital additions |
250,000 |
— |
The company expects to sell about 35% of its merchandise for cash. Of sales on account, 80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale. One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month. Depreciation, insurance, and property taxes represent $6,400 of the probable monthly selling and administrative expenses. Insurance is paid in February and a $40,000 installment on income taxes is expected to be paid in April. Of the remainder of the selling and administrative expenses, one-half are expected to be paid in the month in which they are incurred and the balance in the following month. Capital additions of $250,000 are expected to be paid in March.
Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000. Current liabilities as of March 1 are composed of accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for operating expenses). Management desires to maintain a minimum cash balance of $20,000.
Prepare a monthly cash budget for March and April.
—————————————————————————————-
| Unisyms Company | Unisyms Company | |||||
| Schedule of Collections from Sales | Cash Budget | |||||
| For Two Months Ending April 30 | For Two Months Ending April 30 | |||||
| March | April | March | April | |||
| Cash Sales: | $157,500 | $182,000 | Estimated Cash receipts from: | |||
| Cash Sales | $157,500 | $182,000 | ||||
| Sales on Account: | Collections of accounts receivable | $285,000 | $328,900 | |||
| Collection from month prior sales | $51,000 | $58,500 | Total cash receipts | $442,500 | $510,900 | |
| Collection from current month’s sales | $234,000 | $270,400 | Estimated cash payments for: | |||
| Total Sales on Account | $285,000 | $328,900 | Manufacturing costs | $174,500 | $305,000 | |
| Selling and administrative expenses | $37,000 | $37,500 | ||||
| Capital additions | $250,000 | |||||
| Unisyms Company | Note Payable | |||||
| Schedule of Payments for Manufacturing Costs | Dividends | |||||
| For Two Months Ending April 30 | Income taxes | $40,000 | ||||
| March | April | Total cash payments | $461,500 | $382,500 | ||
| Payments of prior month’s manufacturing costs | $102,000 | $217,500 | Cash increase (decrease) | ($19,000) | $128,400 | |
| Payments of current month’s manufacturing costs | $72,500 | $87,500 | Cash balance at beginning of month | $45,000 | $26,000 | |
| Total Payments | $174,500 | $305,000 | Cash balance at end of month | $26,000 | $154,400 | |
| Minimum cash balance | $20,000 | $20,000 | ||||
| Excess (deficiency) | $6,000 | $134,400 | ||||
| Unisyms Company | ||||||
| Schedule of Payments for Selling & Admin Expenses | ||||||
| For Two Months Ending April 30 | ||||||
| March | April | |||||
| Payments of prior month’s manufacturing costs | $19,500 | $17,500 | ||||
| Payments of current month’s manufacturing costs | $17,500 | $20,000 | ||||
| Total Payments | $37,000 | $37,500 | ||||
| March | April | |||||
| Sales: | $450,000 | $520,000 | ||||
| Manufacturing Costs: | $290,000 | $350,000 | ||||
| Selling & Admin Expenses: | $41,400 | $46,400 | ||||
| Capital Additions: | $250,000 | |||||
| Total Sales on Account: | $292,500 | $338,000 | ||||
| March 1 Current Assets: | ||||||
| Cash: | $45,000 | |||||
| Accounts Receivable: | $51,000 | |||||
| March 1 Current Liabililities: | ||||||
| Accounts Payable: | $121,500 | |||||
| Materials Purchased: | $102,000 | |||||
| Operating Expenses: | $19,500 | |||||
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