Question

Here are some important figures from the budget of Crenshaw, Inc., for the second quarter of 2019.

April May June
Credit sales $ 689,000 $ 598,000 $ 751,000
Credit purchases 302,000 282,000 338,000
Cash disbursements
Wages, taxes, and expenses 137,000 129,000 179,000
Interest 15,600 15,600 15,600
Equipment purchases 53,500 6,600 248,000

The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase. In March 2019, credit sales were $561,000.


Using this information, complete the following cash budget: (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)

Answer 1

Step-by-step explanation:

CRENSHAW, INC.

Cash Budget

For the Quarter Ending June 30, 2019

April May June Total

Beginning cash balance

Add cash collections from:

March credit sales $ 0 $ 0 $ 561,000 $ 561,000

April credit sales 34,450 482,600 413,700 930,750

May credit sales 479,600 523,300 0 1,002,900

Total cash collections 514,050 1,005,900 974,700 2,494,650

Total cash available 514,050 1,005,900 1,535,700 3,055,650

Less cash disbursements for:

Wages, taxes, and expenses 137,000 129,000 179,000 445,000

Interest 15,600 15,600 15,600 46,800

Equipment purchases 53,500 6,600 248,000 308,100

Total cash disbursements 206,100 151,200 442,600 799,900

Ending cash balance $ 307,950 $ 854,700 $ 1,093,100 $ 2,255,750

Note: Cash collections were calculated as follows:

April credit sales collected in April: $689,000 × 35% = $241,150

April credit sales collected in May: $689,000 × 60% = $413,400

May credit sales collected in May: $598,000 × 35% = $209,300

May credit sales collected in June: $598,000 × 60% = $358,800

June credit sales collected in June: $751,000 × 35% = $262,850

Total cash collections: $241,150 + $413,400 + $209,300 + $358,800 + $262,850 = $1,485,500.