Required information
TES-681 Inc. is a retailer. Its accountants are preparing the company's 2nd quarter master budget. The company has the
following balance sheet as of March 31.
TES-681 Inc.
Balance Sheet
March 31
Assets
Cash
$ 81,000
Accounts receivable
132,000
Inventory
56,250
Plant and equipment, net of depreciation
214,000
Total assets
$ 483,250
Liabilities and Stockholders' Equity
Accounts payable
$ 75,000
Common stock
346,000
Retained earnings
62,250
Total liabilities and stockholders' equity
$ 483,250
TES-681 accountants have made the following estimates:
1. Sales for April, May, June, and July will be $250,000, $270,000, $260,000, and $280,000, respectively.
2. All sales are on credit. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts
receivable at March 31 will be collected in April.
3. Each month's ending inventory must equal 30% of next month's cost of goods sold. The cost of goods sold is 75% of sales. The company pays for
40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts
payable at March 31 are related to previous merchandise purchases and will be paid in April.
4. Monthly selling and administrative expenses are always $46,000. Each month $5,000 of this total amount is depreciation expense and the remaining
$41,000 is spent for expenses that are paid in the month they are incurred.
5. The company will not borrow money or pay or declare dividends during the 2nd quarter. The company will not issue any common stock or
repurchase its own stock during the 2nd quarter.
How much is the company's expected cash disbursement for merchandise in the month of April?
