Final answer:
To prepare a cash budget for Melinda Company for the months of April, May, and June 2023, you need to consider the initial cash balance and the cash inflows and outflows for each month. Cash inflows and outflows are calculated, and the cash balance is determined for each month.
Step-by-step explanation:
To prepare a cash budget for Melinda Company for the months of April, May, and June 2023, we need to consider the initial cash balance and the cash inflows and outflows for each month.
Here is the cash budget for Melinda Company:
April:
- Cash inflows: 400,000 (initial cash balance) + 289,000 (cash sales) = 689,000
- Cash outflows: 38,000 (direct materials) + 31,000 (direct labor) + 50,000 (factory overhead) + 25,000 (sales and administration expenses) = 144,000
- Cash balance: 689,000 (cash inflows) - 144,000 (cash outflows) = 545,000
May:
- Cash inflows: 545,000 (cash balance from April) + 295,000 (cash sales) = 840,000
- Cash outflows: 45,000 (direct materials) + 28,500 (direct labor) + 55,000 (factory overhead) + 27,000 (sales and administration expenses) + 58,000 (new furniture) = 213,500
- Cash balance: 840,000 (cash inflows) - 213,500 (cash outflows) = 626,500
June:
- Cash inflows: 626,500 (cash balance from May) + 285,000 (cash sales) = 911,500
- Cash outflows: 55,000 (direct materials) + 29,800 (direct labor) + 58,000 (factory overhead) + 29,500 (sales and administration expenses) + 53,750 (new furniture) = 226,050
- Cash balance: 911,500 (cash inflows) - 226,050 (cash outflows) = 685,450
This cash budget helps in identifying the cash inflows and outflows for each month, ensuring that the company has a positive cash balance at the end of each month.