Problem 20-2A (Algo) Manufacturing: Cash budget and schedule of cash payments LO P2
[The following information applies to the questions displayed below.]
Built-Tight is preparing its master budget. Budgeted sales and cash payments follow:
Budgeted sales
July
August
September
$ 59,500
$ 75,500
$ 52,500
Budgeted cash payments for
Direct materials
17,060
14,340
14,660
Direct labor
4,940
4,260
4,340
Overhead
21,100
17,700
18,100
Sales to customers are 30% cash and 70% on credit. Sales in June were $62,500. All credit sales are collected in the
month following the sale. The June 30 balance sheet includes balances of $33,000 in cash and $5,900 in loans payable.
A minimum cash balance of $33,000 is required. Loans are obtained at the end of any month when the preliminary cash
balance is below $33,000. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each
month-end. Any preliminary cash balance above $33,000 is used to repay loans at month-end. Expenses are paid in the
month incurred and consist of sales commissions (10% of sales), office salaries ($4,900 per month), and rent ($7,400 per
month).
Problem 20-2A (Algo) Part 2
2. Prepare a cash budget for the months of July, August, and September.
Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Enter your final answers in
whole dollars.
BUILT-TIGHT
Cash Budget
July
August
September
Beginning cash balance
$ 33,000 $ 33,000
Add. Cash receipts
61,600
Total cash available
94,600
Less: Cash payments for
Direct materials
17,060
14,340
14,660
Overhead
21,100
17,700
18,100
Direct labor
4,940
4,260
4,340
Sales commissions
5,950
7,550
5,250
Office salaries
4,900
4,900
4,900
Rent
7,400
7,400
7,400
Interest on loan
0
Total cash payments
61,350
56,150
54,650
Preliminary cash balance
Loan activity
Additional loan
Repayment of loan to bank
Ending cash balance
0
0
0
0
0
0
Loan balance
July
August
September
Loan balance-Beginning of month
$ 5,900
Additional loan (loan repayment)
Loan balance-End of month