ReddingCompany_Cash Budget

$5.00

Description

2. ReddingCompanyhasbudgetedsalesrevenuesasfollows:

June

July

August

Creditsales

135,000

145,000

90,000

Cashsales

90,000

255,000

195,000

Totalsales

225,000

400,000

285,000

Pastexperienceindicatesthat60%ofthecreditsaleswillbecollectedinthemonthofsaleandthe
remaining40%willbecollectedinthe followingmonth.Purchasesofinventoryarealloncreditand50%
ispaidinthemonthofpurchaseand50%inthemonthfollowingpurchase.Budgetedinventory
purchasesare:

June

300,000

July

250,000

August

105,000

Othercashdisbursementsbudgeted:(a)sellingand administrativeexpensesof$48,000
each
month,(b)

dividendsof$105,000 willbepaidinJuly,and(c)
purchaseofequipmentin
Augustfor$30,000 cash. Thecompanywishestomaintaina
minimumcashbalanceof$50,000 attheendofeachmonth.

Instructions

PrepareacashbudgetforthemonthsofJulyandAugust.

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