Fury’s Furniture Factory actual sales and purchases for April and May are shown here along with forecasted sales and purchases for June through September.
Sales Purchases
April (Acutal) $860,000 $350,000
May (Acutal) $840,000 $340,000
June(forecast) $815,000 $340,000
July (forecast) $815,000 $400,000
August (forecast)$830,000 $420,000
Sept (forecast) $880,000 $420,000
The company makes 22% of its sales for cash and 78% on credit. Of the credit sales, 45% are collected in the month after the sale and 55% are collected two months later. Fury’s Furniture Factory pays for 18 % of its purchases in the month after purchase and 82% two months after. Labor expense equals 16% of the current month’s sales. Overhead expense equals $24,000 per month. Interest payments of $62,500 are due in June and September. A cash dividend of $102,500 is scheduled to be paid in June. Tax payments of $55,500 are due to be paid in June and September. There is a scheduled capital outlay of $1,275,000 in September. Fury’s Furniture Factory ending cash balance in May is $42,500 and there are no marketable securities at the end of May. The minimum desired cash balance is $20,000 and the maximum desired cash balance is $75,000. Excess cash at month end (any amount above $75,000) is used to buy marketable securities. Marketable securities are sold before borrowing funds in case of a cash shortfall (cash falling below $20,000). (For this problem, the value of Marketable securities is constant. That is, there is no interest earned.)
Prepare a Cash Receipts Schedule, a Cash Payments Schedule and a Cash Budget for Fury’s Furniture Factory for June through September. Use the tables in the text as a template for completing this problem.