Problem 9-9 Schedules of Expected Cash Collections and Disbursements [LO2, LO4, LO8]
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:
July August September
Cash sales $ 6,500 $ 5,250 $ 7,400
Sales on account 20,000 30,000 40,000
Total Sales $ 26,500 $ 35,250 $ 47,400
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 uncollectible.
c. 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.
d. Selling and administrative expenses are budgeted at $13,000 for September. Of this amount, $4,000 is for depreciation.
e. Equipment costing $18,000 will be purchased for cash during September, and dividends totaling $3,000 will be paid during the month.
f. The company maintains a minimum cash balance of $5,000. An open line of credit is available from the company's bank to bolster the cash position as needed.
Prepare a schedule of expected cash collections for September. (Omit the "$" sign in your response.)
September cash sales $
September collections on account:
Total cash collections $
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