Reference no: EM132331612
Problem
Brockbank Builders Ltd is preparing a cash budget for May and June of 2019. Past records reveal that 20% of all credit sales are collected during the month of sale, 60% in the month following the sale, 10% in the second month following the sale and 10% in the third month following the sale. The company pays for 75% of purchases in the month after purchase, and the balance is paid in the month following that.
Selling expenses amount to $6,600 per month plus 15% of monthly sales. Administrative expenses are estimated to be $13,200 per month, which includes $4,900 of depreciation expense. Finance expenses are $1,100 per month. All selling and distribution, administrative, and finance and other expenses (except depreciation) are paid for when incurred.
It is planned to purchase equipment during May 2019 at a cost of $6,600. A $9,000 loan payable will be repaid during June 2019. The interest due at maturity will be $1,630. The company's expected Cash at Bank balance at 1 May 2019 is $13,500.
Estimated sales and purchases data are as follows:
|
2019
|
Sales
|
Purchases
|
|
February
|
74,900
|
38,600
|
|
March
|
66,100
|
33,100
|
|
April
|
88,000
|
55,100
|
|
May
|
60,400
|
27,400
|
|
June
|
71,600
|
38,600
|
Ignoring GST, prepare a cash budget for May and June 2019, by month and in total.