The treasurer of unisyms company has accumulated the following budget
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The treasurer of Unisyms Company has accumulated the following budget information for the first two months of the coming year:
|Selling and administrative|
The company expects to sell about 35% of its merchandise for cash. Of sales on account, 80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale. One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month. Depreciation, insurance, and property taxes represent $6,400 of the probable monthly selling and administrative expenses. Insurance is paid in February and a $40,000 installment on income taxes is expected to be paid in April. Of the remainder of the selling and administrative expenses, one-half are expected to be paid in the month in which they are incurred and the balance in the following month. Capital additions of $250,000 are expected to be paid in March.
Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000. Current liabilities as of March 1 are composed of accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for operating expenses). Management desires to maintain a minimum cash balance of $20,000.
Prepare a monthly cash budget for March and April.
|Unisyms Company||Unisyms Company|
|Schedule of Collections from Sales||Cash Budget|
|For Two Months Ending April 30||For Two Months Ending April 30|
|Cash Sales:||$157,500||$182,000||Estimated Cash receipts from:|
|Sales on Account:||Collections of accounts receivable||$285,000||$328,900|
|Collection from month prior sales||$51,000||$58,500||Total cash receipts||$442,500||$510,900|
|Collection from current month’s sales||$234,000||$270,400||Estimated cash payments for:|
|Total Sales on Account||$285,000||$328,900||Manufacturing costs||$174,500||$305,000|
|Selling and administrative expenses||$37,000||$37,500|
|Unisyms Company||Note Payable|
|Schedule of Payments for Manufacturing Costs||Dividends|
|For Two Months Ending April 30||Income taxes||$40,000|
|March||April||Total cash payments||$461,500||$382,500|
|Payments of prior month’s manufacturing costs||$102,000||$217,500||Cash increase (decrease)||($19,000)||$128,400|
|Payments of current month’s manufacturing costs||$72,500||$87,500||Cash balance at beginning of month||$45,000||$26,000|
|Total Payments||$174,500||$305,000||Cash balance at end of month||$26,000||$154,400|
|Minimum cash balance||$20,000||$20,000|
|Schedule of Payments for Selling & Admin Expenses|
|For Two Months Ending April 30|
|Payments of prior month’s manufacturing costs||$19,500||$17,500|
|Payments of current month’s manufacturing costs||$17,500||$20,000|
|Selling & Admin Expenses:||$41,400||$46,400|
|Total Sales on Account:||$292,500||$338,000|
|March 1 Current Assets:|
|March 1 Current Liabililities:|