1.) Suppose you are preparing your personal cash budget for the year
2003. During 2003, assume that you can expect to earn $3600
from your summer job and $1200 from work as a tutor. Also, your
family always gives you gifts totaling around $400 during the year.
A scholarship from a local Kiwanis Club adds $1000 each year while
you are in college.
Assume your family pays your college costs except for room and
board. Planned expenditures for the year 2003 include apartment
rent for the year at $150 per month for 12 months and annual food
costs of $5600. Transportation costs usually run about $40 per
month. You need to have a little fun, so entertainment will cost
$100 per month.
Will you need a loan in 2003? To answer this question, prepare your
personal cash budget for the year based on the data given.
2.) Trevor Company was organized on March 1, 2004. Projected sales for each of
the first three months of operations are as follows:
March
$480,000
April
590,000
May
505,000
The company expects to sell 10% of its merchandise for cash. Of sales on
account 60% are expected to be collected in the month of sale, 30% in the
month following sale and the remainder in the second month following sale.
Prepare a schedule of cash collections for sales of March, April, and May.
3.) Tutor.com Inc. was organizes on May 31, 2004. Projected selling and
administrative expenses for each of the first three months of operations are
as follows:
June
$95,400
July
126,800
August
156,300
4.) The controller of Butler Boat Company instructs you to prepare a monthly
cash budget for the next three months. You are presented with the following
budget information for August, September, and October, 2004.
August
Sales
Septemb
er
October
$590,000
$650,00
0
$750,000
Manufacturing Costs
300,000
340,000
390,000
150,000
170,000
200,000
Capital Expenditures
120,000
The company expects to sell about 10% of its merchandise for cash. Of sales on
account, 60% are expected to be collected in full in the month of sale, and the
remainder, the following month. Of the manufacturing costs, 80% are expected to
be paid in the month in which they are incurred and the balance in the following
month.
Assets as of August 1 include Cash of $55,000, marketable securities of $85,000
and accounts receivable of $594,000 ($442,000 from July sales and $152,000 from
June sales).
Current liabilities as of August 1 include a $100,000, 10% 90 day note payable
October 20 and $60,000 of accounts payable incurred in July for manufacturing
costs. All selling and administrative expenses are paid in cash in the period in
which they are incurred. It is expected that $1500 in dividends will be received in
August. An estimated income tax payment of $42,000 will be made in September.
Butlers regular quarterly dividend of $15,000 is expected to be declared in
September and paid in October.
Management desires to maintain a minimum cash balance of $45,000.
Prepare a Cash budget for the months of August September and October.