ReddingCompany_Cash Budget

ReddingCompany_Cash Budget

Question
	



2. ReddingCompanyhasbudgetedsalesrevenuesasfollows:















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June






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July

 		
 
 
August

 		


 

 
 
Creditsales

 		
 
 
135,000

 		
 
 
145,000

 		
 
 
90,000

 		


 

 
 
Cashsales

 		
 
 
90,000

 		
 
 
255,000

 		
 
 
195,000

 		


 

 
 
Totalsales

 		
 
 
225,000

 		
 
 
400,000

 		
 
 
285,000

 		









Pastexperienceindicatesthat60%ofthecreditsaleswillbecollectedinthemonthofsaleandthe
remaining40%willbecollectedinthe followingmonth.Purchasesofinventoryarealloncreditand50%
ispaidinthemonthofpurchaseand50%inthemonthfollowingpurchase.Budgetedinventory
purchasesare:







 

 
 
June

 		
 
 
300,000

 		


 

 
 
July

 		
 
 
250,000

 		


 

 
 
August

 		
 
 
105,000

 		









Othercashdisbursementsbudgeted:(a)sellingand administrativeexpensesof$48,000
each
month,(b)



dividendsof$105,000 willbepaidinJuly,and(c)
purchaseofequipmentin
Augustfor$30,000 cash. Thecompanywishestomaintaina
minimumcashbalanceof$50,000 attheendofeachmonth.



Instructions



PrepareacashbudgetforthemonthsofJulyandAugust.