Question

Use the following information to prepare the July cash budget for Pinkie Pie Company for July 31, 2021.
a.) Beginning cash balance on July 1: $55,000.
b.) Cash receipts from sales: 10% is collected in the month of sale, 50% in the next month, and 40% in the second month after sale. Sales amounts are: May (actual), $1,700,000; June (actual), $1,000,000; and July (budgeted), $1,500,000.
c.) Payments to suppliers for merchandise purchases: 85% in the month of purchase and 15% in the month following purchase. Purchases amounts are: June (actual), $590,000; and July (budgeted), $770,000.
d.) Budgeted cash disbursements for salaries in July: $297,000.
e.) Budgeted depreciation expense for July: $10,000.
f.) Other cash expenses budgeted for July: $190,000.
g.) Cash dividends to be paid in July: $70,000.

Answer 1

Answer:

Pinkie Pie Company

Cash Budget for the month of July:

Beginning balance                  $55,000

Expected cash receipts        1,330,000

Cash in hand                      $1,385,000

Payments:

Purchases                             $743,000

Salaries                                   297,000

Other cash expenses             190,000

 Cash Dividends                        70,000

Expected cash payments $1,300,000

Expected cash balance        $85,000

Explanation:

a) Data and Calculations:

a. Beginning cash balance on July 1: $55,000.

b. Cash receipts from sales:  May (acetual)   June (actual)  July (budgeted)

Sales                                        $1,700,000      $1,000,000    $1,500,000

10% month of sale                                                                        150,000

50% in the next month                                                               500,000

40% in the second month                                                          680,000

Total expected cash collections in July                                $1,330,000

c. Payments on merchandise purchases:

                                               June (actual)    July (budgeted)

Purchases                                 $590,000        $770,000

85% in the month                                               654,500

15% in the following month                                  88,500

Total payment for purchases                          $743,000

d. Salaries in July: $297,000

f. Other cash expenses $190,000

 g. Cash Dividends $70,000