Problem
Queen manufacturing company's budgeted income statement includes the following data:
|
|
March
|
April
|
May
|
June
|
|
Sales
|
140000
|
95000
|
95000
|
100000
|
|
Commission Exp - 15% of sales
|
21000
|
14250
|
14250
|
15000
|
|
Salary expense
|
30000
|
30000
|
30000
|
30000
|
|
Miscellaneous Expense - 4% of sales
|
5600
|
3800
|
3800
|
4000
|
|
Rent expense
|
3000
|
3000
|
3000
|
3000
|
|
Utilities expense
|
2100
|
2100
|
2100
|
2100
|
|
Insurance expense
|
1800
|
1800
|
1800
|
1800
|
1) All sales are made on cash basis.
2) The budget assumes that 60% of the commission expenses are paid in the month they were incurred and the remaining 40% are paid one month later.
3) 40% of salary expenses are paid in the month incurred and the remaining 60% are paid on one month later.
4) Miscellaneous expense, rent expense and utilities expense are assumed to be paid in the same month which they are incurred.
5) Insurance was prepaid for the year on 1 January.
6) The cash balance on 1 April was $17,500.
Task
Prepare the cash budget for each of the months April, May and June.