Question

EA12. LO 7.3 Desiccate purchases direct materials each month. Its payment history shows that 70% is paid in the month of purchase with the remaining balance paid the month after purchase. Prepare a cash payment schedule for March if in January through March, it purchased $35,000, $37,000, and $39,000, respectively. EA14. LO 7.3 Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is collected in the month of sale, 25% is collected the month after the sale, and 5% is collected the second month after the sale. How much cash will be collected in August if sales are estimated as $75,000 in June, $65,000 in July, and $90,000 in August? PA6. LO 7.3 Relevant data from the Poster Company's operating budgets are: Sales Direct material purchases Direct labor Manufacturing overhead Selling and administration expenses Depreciation included in selling and administration Collections from customers Cash payments for purchases Quarter 1 $208,470 115,295 75,205 25,300 33,500 Quarter 2 $211,539 120,832 73,299 25,300 33,500 1,500 215,392 114,295 1,000 240,155 119,253 Additional data: Capital assets were sold in January for $10,000 and $4,500 in May. Dividends of $4,500 were paid in February. The beginning cash balance was $60,359 and a required minimum cash balance is $59,000. Use this information to prepare a cash budget for the first two quarters of the year

Answer 1

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Desiccate
Cash payment schedule	January	February	March	January
Material Purchased	35,000.00	37,000.00	39,000.00		A
70% paid in the same month			27,300.00		B= 70% of March
30% paid of February paid in March			11,100.00		C= 30% of February
Cash payment schedule			38,400.00		D=B+C
Halifax Shoes
Collection for August	June	July	August
Total sales	75,000.00	65,000.00	90,000.00		E
Cash sale @30%			27,000.00		F= E*30%
Credit sale @70%	52,500.00	45,500.00	63,000.00		G=E*70%
65% collected in the same month			40,950.00		H=G*65%
25% of July			11,375.00		I= 25% of G of July.
5% of June			2,625.00		J= 5% of G of June.
Collection for August			81,950.00		K=F+H+I+J
Poster Company
Cash Budget
	Quarter 1	Quarter 2
Opening Balance	60,359.00	59,000.00
Add:
Collection from customers	215,392.00	240,155.00
Sale of capital assets	10,000.00	4,500.00
Total cash available	285,751.00	303,655.00
Less:
Payment for purchases	114,295.00	119,253.00
Direct Labor	75,205.00	73,299.00
Manufacturing overhead	25,300.00	25,300.00
Selling & Administrative expenses (excl. depreciation)	32,000.00	32,500.00
Dividend paid	4,500.00	-
Total Payments	251,300.00	250,352.00
Balance before borrowings	34,451.00	53,303.00	L
Minimum Cash balance to be maintained	59,000.00	59,000.00	M
Borrowings	24,549.00	5,697.00	N=M-L
Ending Balance	59,000.00	59,000.00	O=L+N