Creating the cash budget for a month


Response to the following problem:

Tait Company has the following information for the month of June:

a. Beginning cash balance on June 1 was $94,500.

b. Cash receipts from sales have the following pattern: 40% is collected in the month of sale 50% is collected in the next month 5% is collected in the second month after the sale 5% is uncollectible.

c. The following are the actual and budgeted amounts of sales: April (actual) $540,000 May (actual) 720,000 June (budgeted) 630,000

d. Payments on purchases are 50% in the month of purchase and 50% in the month following the purchase. The following actual and budged amounts of merchandise purchases are known:

May (actual) $270,000 June (budgeted) 405,000

e. Budged cash disbursements for salaries in June are $180,000.

f. Budgeted amortization expense for June is $9,000.

g. Other cash expenses budgeted for June are $48,000.

h. Accrued income taxes due in June are $101,250.

i. Bank loan interest due in June is $6,750.

Required: Prepare a cash budget for Tait Company for the month of June.

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Financial Accounting: Creating the cash budget for a month
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