Quarterly cash dividends are planned, Financial Accounting

Given the information that follows, draw a cash budget for the XYZ Store for the first six months of 2012.

  • Every prices and costs remain constant.
  • Sales are 80% for credit and 20% for cash.
  • With respect to credit sales, 55% are collected in the month after the sale, 30% in the second month, and 15% in the third.  Bad-debt losses are insignificant.
  • Sales, actual and estimated, are:

October 2011

$300,000

March 2012

$200,000

November 2011

450,000

April 2012

350,000

December 2011

400,000

May 2012

280,000

January 2012

200,000

June 2012

220,000

February 2012

250,000

July 2012

320,000

  • Payments for purchases of merchandise are 90% of the following month's anticipated sales.
  • Wages and salaries are:

January 2012

$40,000

April 2012

$50,000

February 2012

45,000

May 2012

45,000

March 2012

55,000

June 2012

55,000

  • Rent is $5,000 a month.
  • Interest of $8,500 is due on the last day of every calendar quarter, and no quarterly cash dividends are planned.
  • A tax prepayment of $60,000 for 2012 income is due in April.
  • A capital investment of $60,000 is planned in June, to be paid for then.
  • The company has a cash balance of $90,000 at December 31, 2011, which is the minimum desired level for cash.  Funds can be borrowed in multiples of $5,000. (Ignore interest on this type of borrowings.)

 

Posted Date: 3/22/2013 1:14:50 AM | Location : United States







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