CASE 2 (20 points)
Here are some important figures from the budget of Wise Corporation for the third quarter of 2020:
Credit sales
July
August
September
$1,275,800
$1,483,500
$1,096,300
Credit purchases
765,480
990,160
657,780
Cash disbursements
Wages, taxes, and expenses
348,600
395,620
337,150
Interest
29,900
29,900
29,900
Equipment
0
158,900
96,300
Credit sales collections
Collected in month of sale
35%
Collected month after sale
60%
Never collected
5%
June credit sales
$1,135,020
June credit purchases
$ 681,012
Beginning cash balance
$ 425,000
All credit purchases are paid in the following month after the purchase.
Instructions:
a) Using the above information, complete the following cash budget. (15 points)
Beginning cash balance
Cash receipts:
Cash collections from credit sales
Total cash available
Cash disbursements:
Payments for purchases
Wages, taxes, and expenses
Interest
Equipment purchases
Total cash disbursements
Ending cash balance
b) What are the steps in preparing cash budget? Explain. (5 points)
July
August
September