Wages and salaries, Cost Accounting

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Given the information that follows, prepare a cash budget for the XYZ Store for the first six months of 2010.

  • All prices and costs remain constant.
  • Sales are 90% for credit and 10% for cash.
  • With respect to credit sales, 70% are collected in the month after the sale, 20% in the second month, and 10% in the third. Bad-debt losses are insignificant.
  • Sales, actual and estimated, are:

October 2009         $200,000        March 2010        $220,000
November 2009      350,000        April 2010          300,000
December 2009      300,000        May 2010          280,000
January 2010         150,000        June 2010          240,000
February 2010        250,000        July 2010          320,000

  • Payments for purchases of merchandise are 80% of the following month's anticipated sales.
  • Wages and salaries are:

January 2010        $45,000            April 2010          $55,000
February 2010        40,000            May 2010            60,000
March 2010            50,000            June 2010            57,000


  • Rent is $6,000 a month.
  • Interest of $9,500 is due on the last day of each calendar quarter, and no quarterly cash dividends are planned.
  • A tax prepayment of $70,000 for 2010 income is due in April.
  • A capital investment of $80,000 is planned in June, to be paid for then.
  • The company has a cash balance of $80,000 at December 31, 2009, which is the minimum desired level for cash. Funds can be borrowed in multiples of $5,000. (Ignore interest on such borrowings.)


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