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How do you compete the Cash Budget Everything must be in the same format in the table. Someone from Chegg sent wrong answers before. Let me know if you can help I really would appreciate your help

How do you compete the Cash Budget? Everything must be in the same format in the table. Someone from Chegg sent  wrong answers before. Let me know if you can help. I really would appreciate your help.

Davis Dry Goods distributes silk ties. You are charge of creating DavisAc€?c master budget for the upcoming second quarter, April Ac€?o June 2015.

Davis desires a minimum ending cash balance of each month $11,000. The ties are sold to retailers for $9 each. Recent and forecasted sales in units are as follows:

January (actual)Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦..20,000

February (actual)Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.. 24,000

March (actual)Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 28,000

April Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦. 35,000

MayAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 45,000

JuneAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦-Ac€¦Ac€¦..60,000

July Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 40,000

August Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 36,000

SeptemberAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦..Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.32,000

The large buildup in sales before and during June is due to FatherAc€?cs Day. Ending inventories are supposed to equal 90% of the next monthAc€?cs sales in units. The ties cost the company $5 each.

Purchases are paid for as follows: 50% in the month of purchases and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25% of a monthAc€?cs sales are collected by month-end. An additional 75% is collected in the following month. Bad debts have been negligible.

The companyAc€?cs monthly selling and administrative expenses are given below:

Variable:

SalesAc€?cs commissionsAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦..$1 per tie

Fixed:

Wages and salariesAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦22,000

UtilitiesAc€¦Ac€¦Ac€¦Ac€¦.Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.14,000

InsuranceAc€¦Ac€¦..Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦1,200

DepreciationAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦1,500

MiscellaneousAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.3,000

All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance expired.

Davis has an agreement with the bank that allows it to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $11,000 in cash.

Land will be purchased during May for $25,000 cash. Davis declares and pays dividends of $11,000 in the first month each quarter. The companyAc€?cs balance sheet at March 31 is given below:

                                                Assets

CashAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ $10,000

Accounts receivableAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦..Ac€¦.Ac€¦.. 189,000

Inventory (31,500 ties) Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 157,500

Prepaid Insurance Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦..Ac€¦.. 14,400

Fixed assets, netAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.Ac€¦..203,700

Total Assets Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦574,600

                Liabilities and Stock holdersAc€?c Equity

Accounts PayableAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦..$85,750

Capital StockAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦,,Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦312,000

Retained EarningsAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.Ac€¦Ac€¦Ac€¦.176,850

Total Liabilities and StockholdersAc€?c EquityAc€¦Ac€¦...............574,600

Davis Dry Goods

Schedule of Expected Cash Collections

For Quarter Ending June 2015

 

April

May

June

Quarter

February Sales

54,000

0

0

54,000

March Sales

189,000

63,000

0

252,000

April Sales

78,750

236,250

78,750

393,750

May Sales

0

101,250

303,750

405,000

June Sales

0

0

135,000

135,000

Total Cash Sales

321,750

400,500

517,500

1,239,750

Davis Dry Goods

Cash Budget

For the Quarter Ending June 30, 2015

 

April

May

June

Cash Balance, Beginning

10,000

   

Add Receipts from Customers (Part 1b)

321,750

400,500

517,500

Total Cash Available

331,750

   

Less Disbursements:

     

Inventory Purchases (Part 1d)

195,750

256,250

251,250

Selling Expenses

35,000

45,000

60,000

Salaries and Wages

22,000

22,000

22,000

Utilities

14,000

14,000

14,000

Miscellaneous

3,000

3,000

3,000

Dividends Paid

11,000

0

0

Land Purchases

0

25,000

0

Total Disbursements

280,750

365,250

350,250

Excess (Deficiency) of Receipts Over Disbursements

(51,000)

   

Financing:

     

Net Cash from Borrowings

   

0

Repayments*

0

0

 

Interests

0

0

 

Net Financing

     

Cash Balance, Ending

     

Maximum amount (in increments of $1,000) that the company could repay to the bank and still have at leat a $11,000 ending balance.

To compute the interest for June, here is the format;

April amount from Borrowings x 1% x 3 = ?

May amount from Borrowings x 1% x 2 = ?

The total interest amount for April + May will be listed under "Interests" in the Financing section

Jun 23 2020 View more View Less

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