Question

Assume that Waycross Manufacturing manages its cash flow from its home office. Waycross controls cash disbursements by category and month. In setting its budget for the next six months, beginning in July, it used the following managerial guidelines:
Category Guidelines
Purchases Pay half in current and half in following month.
Payroll Pay 90% in current month and 10 percent in following
month.
Loan Payments Pay total amount due each month.
Predicted activity for selected months follow:
Category May June July August
Purchases $30,000 $46,000 $48,000 $50,000
Payroll 100,000 130,000 120,000 100,000
Loan Payments10,000 10,000 12,000 12,000
Prepare a schedule showing cash disbursements by account for July and August.

Answer 1

Answer:

Waycross Manufacturing

A Schedule, showing cash disbursements by account for July and August:

Category                                         July          August

Purchases                                 $ 47,000     $ 49,000

Payroll                                          121,000      102,000

Loan Payments                            12,000         12,000

Total cash disbursements      $180,000    $163,000

Explanation:

a) Data:

Predicted activity for selected months follow:

Category              May         June           July        August

Purchases       $30,000   $46,000    $48,000   $50,000

Payroll              100,000    130,000     120,000    100,000

Loan Payments 10,000      10,000       12,000       12,000

b) Calculations:

Category                               May         June           July        August

Purchases (50/50)          $15,000    $15,000

                                                           23,000    $23,000

                                                                             24,000     $24,000

                                                                                                25,000

Purchases                                                          $47,000     $49,000

Payroll (90/10)                $90,000   $10,000

                                                         117,000     $13,000

                                                                          108,000      $12,000

                                                                                               90,000

Payroll                                                              $121,000    $102,000

     

Loan Payments (100%)  10,000       10,000      12,000         12,000