Cash Budget Below is summary monthly income statement data for Ace Manufacturing Company

Cash Budget Below is summary monthly income statement data for Ace Manufacturing Company

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This is a comprehensive problem all contained on this spreadsheet tab. 

 

 

 

 

 

 

 

 

 

 Cash Budget

 

 

 

 

 

 

 

 

 

 Below is summary monthly income statement data for Ace Manufacturing Company.

 

 

 

 

 

 

 

 

 

 

 January

 February

 

 

 Sales revenue

 275 000

 250 000

 

 

 Direct materials purchases

 60 000

 70 000

 

 

 Direct labor

 88 000

 95 000

 

 

 Manufacturing overhead

 60 000

 62 000

 

 

 Selling and administrative expenses

 45 000

 46 000

 

 

 

 

 

 

 

All sales are on account, and history has shown that 40% of sales is expected to be collected in the month of the sale, with 60% collected the following month.

 

 

Direct materials are paid 50% in the month of purchase and 50% the following month. All other expenses are paid as incurred. All costs shown are cash-based costs (depreciation has already been eliminated).

 

 

 

 

 

 

 

 Other data:

 

 

 

 

 1.  December sales were $240,000.

 

 

 

 

 2.  Purchases of direct materials purchased in December were $50,000.

 

 

 

 

 3.  The company has interest payments due of $5,000 per month.

 

 

 

 

 4.  The cash balance on January 1 was $15,000.

 

 

 

 

 

 

 

 

 

 Instructions

 

 

 

 

A.  Prepare schedules for expected collections from customers and expected payments for direct materials purchases.

 

 B.  Prepare a cash budget for January and February.

 

 

 

 

 

 

 

 

 

 

 Part A

 

 Part B


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