Question

Use the following information to prepare the September cash budget for PTO Co. The following information relates to expected cash receipts and cash payments for the month ended September 30.

a. Beginning cash balance, September 1, $41,000.
b. Budgeted cash receipts from sales in September, $258,000.
c. Raw materials are purchased on account. Purchase amounts are August (actual), $72,000, and September (budgeted), $108,000. Payments for direct materials are made as follows: 70% in the month of purchase and 30% in the month following purchase.
d. Budgeted cash payments for direct labor in September, $30,000.
e. Budgeted depreciation expense for September, $3,800.
f. Other cash expenses budgeted for September, $59,000.
g. Accrued income taxes payable in September, $10,800.
h. Bank loan interest payable in September, $1,700.

Answer 1

Answer and Explanation:

The Preparation of the cash budget is shown below:-

PTO Co.

Cash budget

For the month ended Sept. 30

Particulars Amount

Beginning cash balance $41,000

Add: Cash receipts for sales $258,000

Total cash available $299,000

LesS:

Cash disbursement

Direct Material $97,200

($72,000 × 30%) + ($108,000 × 70%)

Direct labor $30,000

Other expenses $59,000

Accrued Taxes $10,800

Interest on bank loan $1,700

Total Cash disbursement $198,700

Ending cash balance $100,300