Explore BrainMass

Explore BrainMass

    Budgeted cash receipts

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The Kenanga Company, a merchandising firm, has planned the following sales for the next four months:
    March April May June
    Total budgeted sales $50,000 $70,000 $90,000 $60,000

    Sales are made 40% for cash and 60% on account. From experience, the company has learned that a month's sales on account are collected according to the following pattern:
    Month of sale 70%
    First month following month of sale 20%
    Second month following month of sale 8%
    Uncollectible 2%

    The company requires a minimum cash balance of $4,000 to start a month.
    Required:
    a. Compute the budgeted cash receipts for June by preparing the schedule of cash collected.

    b. Assume the following budgeted data for June:

    Purchases $52,000
    Selling and administrative expenses $10,000
    Depreciation $8,000
    Equipment purchases $15,000
    Cash balance, beginning of June $6,000

    Using this data, along with your answer to part (1) above, prepare a cash budget in good form for June. Clearly show any borrowing needed during the month. The company can borrow in any dollar amount, but will not pay any interest until the following month.

    © BrainMass Inc. brainmass.com June 3, 2020, 10:36 pm ad1c9bdddf
    https://brainmass.com/business/cash-budgeting/budgeted-cash-receipts-240088

    Solution Preview

    The Kenanga Company, a merchandising firm, has planned the following sales for the next four months:
    March April May June
    Total budgeted sales $50,000 $70,000 $90,000 $60,000

    Sales are made 40% for cash and 60% on account. From experience, the company has learned that a ...

    Solution Summary

    Response provides the steps to compute the budgeted cash receipts

    $2.19

    ADVERTISEMENT