Gina's company, Daisy's Delights Barkery & Boutique (DDB&B) is in the process of preparing their cash budget for the month of August. They have provided you with the following sales
budget:
MAY
JUNE
JULY AUGUST
GROSS SALES
$50,000
$60,000
$70,000 $80,000
CREDIT
CASH
Based on past experience, 10% of all sales are cash sales while 90% are credit sales. The
typical collection pattern for credit sales is 20% in the month of sale, 50% in the first month
following sale and 25% in the second month following sale. There is an estimated
uncollectible rate of 5%.
The ending cash budget at July 31 is projected to be $10,000. Budgeted costs for the month of
August are as follows: The minimum cash balance needed to start a month is $8,000. All
borrowing must be in increments of $1,000. All expenses are paid in the month incurred except
for inventory. Inventory is paid 1/3 in the month of purchase and 2/3 in the month following
purchase
Utilities expense
$5,000
July Purchases of supplies
$45,000
August Purchases of supplies $150,000
Salaries
$65,000
Administrative expenses
$20,000 (Includes $5,000 of depreciation expense)
Rent
$35,000
Amortization expense
$7,000
REQUIRED: (1) Prepare a schedule of BUDGETED CASH RECEIPTS FOR AUGUST
and (2) Prepare a CASH BUDGET FOR THE MONTH OF AUGUST, Assume total cash
receipts (collected) for Part (1) was $70,000