Chapter 8, Problem 8.24P

(1)

To determine

Prepare expected cash collections April, May, and June months.

Introduction: Cash collection means the recovery of cash from an individual for which an invoice is generated. Unpaid invoices are meant to be outstanding and are a function of account receivables. Cash collection is a method to compute the amount that a company receives during a month.

(2)

To determine

Prepare merchandise purchase budget for all three months and prepare expected cash disbursements for all three months and quarter in total.

Introduction: Cash collection means the recovery of cash from an individual for which an invoice is generated. Unpaid invoices are meant to be outstanding and are a function of account receivables. Cash collection is a method to compute the amount that a company receives during a month.

(3)

To determine

Prepare cash budget for April, May, June, and quarter.

Introduction: Cash collection means the recovery of cash from an individual for which an invoice is generated. Unpaid invoices are meant to be outstanding and are a function of account receivables. Cash collection is a method to compute the amount that a company receives during a month.

Cash budget for April is $\$40,000$ , May is $\$40,000$ , June is $\$57,100$ , and quarter is $\$57,100$

Particulars	April	May	June	Quarter
Beginning cash balances	$\$52,000$	$\$40,000$	$\$40,000$	$\$52,000$
Add: Collections from customers	$\$368,000$	$\$636,000$	$\$740,000$	$\$1,744,000$
Total cash available	$\$420,000$	$\$676,000$	$\$780,000$	$\$1,796,000$
Less: cash disbursements
Purchase for inventory	$\$357,000$	$\$518,000$	$\$455,000$	$\$1,330,000$
Selling expenses	$\$79,000$	$\$120,000$	$\$62,000$	$\$261,000$
Administrative expenses	$\$25,000$	$\$32,000$	$\$21,000$	$\$78,000$
Land purchases		$\$16,000$		$\$16,000$
Dividends paid	$\$49,000$			$\$49,000$
Total cash disbursements	$\$510,000$	$\$686,000$	$\$538,000$	$\$1,734,000$
Excess availability of cash over disbursements	$\left(\$90,000\right)$	$\left(\$10,000\right)$	$\$242,000$	$\$62,000$
Financings:
Borrowings	$\$130,000$	$\$50,000$	$\left(\$180,000\right)$	$\left(\$180,000\right)$
Repayments
Interest ($130,000*1%*3+$50,000*1%*2)			$\left(\$49,000\right)$	$\left(\$49,000\right)$
Total Financing	$\$130,000$	$\$130,000$	$\left(\$184,900\right)$	$\left(\$4,900\right)$
Ending cash balance	$\$40,000$	$\$40,000$	$\$57,100$	$\$57,100$