To Industries prepares monthly cash budgets.The following budget information is available for April and May 2020:
To Industries prepares monthly cash budgets.The following budget information is available for April and May 2020:
April
May
Sales
$650,000
$700,000
Direct material purchases
220,000
240,000
Direct labor
175,000
180,000
Manufacturing overhead
120,000
130,000
Selling and administrative expenses
150,000
150,000
All sales are credit sales.The company expects to collect 65% from customers in the month of the sale and the remaining 35% in first month following the sale.The company purchases direct materials on account.The company pays for 70% of the purchases in the month of the purchases and the remaining 30% in the first month following the purchase.Direct labor, manufacturing overhead, and selling and administrative expenses are paid in cash in the month incurred.
Additional information:
March 2020 credit sales were $600,000
March 2020 purchases of direct materials were $200,000
The company’s cash balance on April 1, 2020 is expected to be $90,000
The company wants to maintain a minimum cash balance of $80,000 and has a line of credit in the amount of 1,000,000, with an annual interest rate of 6%, available to borrow if the budgeted cash balance falls below that level.Any amounts borrowed on the line of credit at the end of a month require a cash interest payment in the subsequent month.If the ending cash balance in a month exceeds the minimum balance, the excess amount is used to repay any amounts borrowed on the line of credit.
Required
Prepare a schedule of cash collections from credit sales for April and May 2020.
Prepare a schedule of cash disbursements for direct material purchases for April and May 2020.
Prepare a cash budget for April and May 2020 in columnar format.
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
