Question

Here are some important figures from the budget of Crenshaw, Inc., for the second quarter of 2019:

April May June
Credit sales $416,000 $365,000 $453,000
Credit purchases 193,000 181,000 214,000
Cash disbursements
Wages, taxes, and expenses 81,100 76,600 105,300
Interest 10,800 10,800 10,800
Equipment purchases 40,000 12,500 161,000

The company predicts that 5 percent of its credit sales will never be collected, 25 percent of its sales will be collected in the month of the sale, and the remaining 70 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase. In March 2019, credit sales were $343,000. Using this information, write down the cash budget.

Answer 1

Beginning cash Balance 123,000 ; 150,200 ; 239,750

Cash receipts :

Cash collection from credit sales 344,100 ; 382,450 ; 368,750

Cash available 467,100 ; 532,650 ; 608,500

Cash disbursement :

Purchases 185,000 ; 193,000 ; 181,000

Wages, taxes and expenses 81,100 ; 76,600 ; 105,300

Interest 10,800 ; 10,800 ; 10,800

Equipment purchases 40,000 ; 12,500 ; 161,000

Total Cash disbursement 316,900 ; 292,900 ; 458,100

Ending Balance 150,200 ; 239,750 ; 150,400

Step-by-step explanation:

Cash budgets are prepared to identify the movement of cash in business. The cash collections are the receipts and cash disbursement are the expense paid in cash.