acct 504 case study 3 cash budget
CASE STUDY 3 - Cash Budget
SCHEDULE OF EXPECTED CASH COLLECTIONS FROM CUSTOMERS:
Credit Sales May June
April (94,000 * 0.70) = 65,800 65,800
May (89,500 * 0.30) = 26,850, June (89,500 * 0.70) = 62,650 26,850 62,650
June (75,000 * 0.30) = 22,500 22,500
Total Cash Collections 92,650 85,150
SCHEDULE FOR EXPECTED PAYMENTS FOR PURCHASE OF INVENTORY
Inventory purchases May June
April (195,000 * 0.60 ) = 117,000 117,000
May (135,000 * 0.40) = 54,000, June (135,000 * 0.60) = 81,000 54,000 81,000
June (63,000 * 0.40) = 25,200 25,200
Total Payments for Inventory Purchases 171,000 106,200
LBJ Company Cash Budget For the Two Months of May and June May June
Cash balance $20,000 $20,000
Add: Receipts Collections from customers 92,650 85,150 Sale of plant assets 33,000 Sale of new common stock 50,000 Cash sales 75,000 57,000
Total receipts 200,650 192,150
Total Available Cash 220,650 212,150
Less: Disbursements Purchases of inventory 171,000 106,200 Operating expenses 15,000 15,000 Selling and administrative expenses 10,150 10,150 Equipment purchase 35,000 Dividends 20,000
Total disbursements 231,150 151,350
Excess (deficiency of available cash over disbursements) (10,500) 60,800 Financing Borrowings 30,500 Repayments (40,008)
Ending cash balance $20,000 20,792 30,500 * 10% * (2/12) = 508 + 30,500 = 40,008
Please answer the 3 qualitative questions on the next tab called Qualitative Questions.
1) What are the three sections of a Cash Budget, and what is included in each section? The three sections of a cash budget are the cash receipts, cash disbursements and financing section. The cash
SCHEDULE OF EXPECTED CASH COLLECTIONS FROM CUSTOMERS:
Credit Sales May June
April (94,000 * 0.70) = 65,800 65,800
May (89,500 * 0.30) = 26,850, June (89,500 * 0.70) = 62,650 26,850 62,650
June (75,000 * 0.30) = 22,500 22,500
Total Cash Collections 92,650 85,150
SCHEDULE FOR EXPECTED PAYMENTS FOR PURCHASE OF INVENTORY
Inventory purchases May June
April (195,000 * 0.60 ) = 117,000 117,000
May (135,000 * 0.40) = 54,000, June (135,000 * 0.60) = 81,000 54,000 81,000
June (63,000 * 0.40) = 25,200 25,200
Total Payments for Inventory Purchases 171,000 106,200
LBJ Company Cash Budget For the Two Months of May and June May June
Cash balance $20,000 $20,000
Add: Receipts Collections from customers 92,650 85,150 Sale of plant assets 33,000 Sale of new common stock 50,000 Cash sales 75,000 57,000
Total receipts 200,650 192,150
Total Available Cash 220,650 212,150
Less: Disbursements Purchases of inventory 171,000 106,200 Operating expenses 15,000 15,000 Selling and administrative expenses 10,150 10,150 Equipment purchase 35,000 Dividends 20,000
Total disbursements 231,150 151,350
Excess (deficiency of available cash over disbursements) (10,500) 60,800 Financing Borrowings 30,500 Repayments (40,008)
Ending cash balance $20,000 20,792 30,500 * 10% * (2/12) = 508 + 30,500 = 40,008
Please answer the 3 qualitative questions on the next tab called Qualitative Questions.
1) What are the three sections of a Cash Budget, and what is included in each section? The three sections of a cash budget are the cash receipts, cash disbursements and financing section. The cash