Use the following information to prepare the September cash budget for PTO Co. The following information relates to expected cash receipts and cash payments for the month ended September 30.Beginning cash balance, September 1, $40,000.Budgeted cash receipts from sales in September, $255,000.Raw materials are purchased on account. Purchase amounts are August (actual), $80,000; and September (budgeted), $110,000. Payments for direct materials are made as follows: 65% in the month of purchase and 35% in the month following purchase. Budgeted cash payments for direct labor in September, $40,000.Budgeted depreciation expense for September, $4,000.Other cash expenses budgeted for September, $60,000.Accrued income taxes payable in September, $10,000.Bank loan interest payable in September, $1,000.

Answer and Explanation:

According to the scenario, the presentation of the September cash budget is presented below:

                        September Cash Budget for PTO Co.

Particulars                                                                   Amount ($)

Opening cash balance                                                  40,000

Add - Cash receipts                                                225,000

Total cash receipts                                                      265,000

Less - Cash paid for raw material in august (80,000 × 35%)-28,000

Less - Cash paid for raw material in September (110,000 × 65%) -71,500

Less - Direct labor                                                                      -40,000

Less - Cash expenses                                                             -60,000

Less - Income tax paid                                                              -10,000

Less-  Bank interest                                                              -1,000

Ending cash balance                                                             54,500

We simply added the cash receipts as it increased the cash balance and deduct all cash payments as it decreased the cash balance

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: