question archive Calgon Products, a distributor of organic beverages, needs a cash budget for September
Calgon Products, a distributor of organic beverages, needs a cash budget for September
Subject:ManagementPrice: Bought3
Calgon Products, a distributor of organic beverages, needs a cash budget for September. The following information is available:
a) The cash balance at the beginning of September is $9,000.
b) Actual sales for July and August and expected sales for September are as follows:
Cash Sales July August September
$6,500 $5,250 $7,400
Sales on Account 20,000 30,000 40,000
Total Sales $26,500 $35,250 $47,400
c. Sales on account are collected over a three-month period as follows: 10% collected in the month of sale, 70% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is collectible.
d. Purchases of inventory will total $25,000 for September. Twenty percent of a month's inventory purchases are paid for during the month of purchase. The accounts payable remaining from August's inventory purchases total $16,000, all of which will be paid in September.
e. Selling and administrative expenses are budgeted at $13,000 for September. Of this amount, $4,000 is for depreciation.
f. Equipment costing $18,000 will be purchased for cash during September, and dividends totaling $3,000 will be paid during the month.
g. The company maintains a minimum cash balance of $5,000. An open line of credit is available from the company's bank to bolster the cash position as needed.
Required:
1. Make a schedule of expected cash collections for September.
2. Make a schedule of expected cash disbursements during September for inventory purchases.
3. Make a cash budget for September. Indicate in the financing section any borrowing that will be needed during September.
