Short Answer:
1. Preparation of cash budget (5.4 points)
Use the following information to prepare a cash budget for Knightsbridge Corporation for the
month of June 2012.
In May, 30-day credit sales were $175,000; 80% of this amount is estimated to be collectible in
June.
June sales are estimated to be $425,000; cash sales are usually 25% of total sales. Only 10% of
credit sales are collected in the month in which the sale is made.
Total fixed expenses are $60,000 per month, including $26,000 depreciation. Variable expenses
are 55% of sales. All expenses requiring payment are paid in cash when incurred.
A $40,000 note payable must be paid on June 30.
As of May 31, the cash balance is $94,000.
KNIGHTSBRIDGE CORPORATION
Cash Budget
For the Month of June 2012
Cash balance at beginning of month.
Receipts:
Collections from customers:
May credit sales
June credit sales
June cash sales
Total cash available.
Disbursements:
Fixed expenses
Variable expenses
Note payable
Cash balance at end of month
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