NUBD Co., a merchandising firm, is preparing its master budget and has gathered the following data to help budget cash disbursements: Budgeted data: Cost of goods sold Desired decrease in inventories Desired decrease in accounts payable P1,680,000 P80,000 P150,000

NUBD Co., a merchandising firm, is preparing its master budget and has gathered the following data to help budget cash disbursements: Budgeted data: Cost of goods sold Desired decrease in inventories Desired decrease in accounts payable P1,680,000 P80,000 P150,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 13EA: What is the amount of budgeted cash payments if purchases are budgeted for $420,000 and the...

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Concept explainers

Cash budget

A cash budget is an estimate of an organization's cash flow for the future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future. If cash receipts are insufficient to cover future expenses, an organization may plan to obtain funds from other sources. After estimating the sales, purchase, and capital expenditure budgets for the year, management develops a cash budget. These budgets are created to ensure that an organization's cash flow is managed. It is important to note that only cash transactions are recorded when actual cash enters and exits an organization.

Question

All of the accounts payable are for inventory purchases and all inventory items are purchased on account. What are the estimated cash disbursements for inventories for the budget period?

NUBD Co., a merchandising firm, is preparing its master budget and has gathered
the following data to help budget cash disbursements:
Budgeted data:
Cost of goods sold
Desired decrease in inventories
Desired decrease in accounts payable
P1,680,000
P80,000
P150,000

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