ACTG2020_Week8 Ch9_2014

Cash receipts listing all cash inflows excluding

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Unformatted text preview: . Cash excess or deficiency; and 4. The financing section listing all borrowings, repayments and interest. LO 2 The Cash Budget Royal: q Maintains a 16% open line of credit for $75,000 q Maintains a 16% open line of credit for $75,000 q Maintains a minimum cash balance of $30,000 q Maintains a minimum cash balance of $30,000 q Borrows on the first day of the month and repays q Borrows on the first day of the month and repays lloans on the last day of the month oans on the last day of the month q Pays a cash dividend of $49,000 in April q Pays a cash dividend of $49,000 in April q Purchases $143,700 of equipment in May and q Purchases $143,700 of equipment in May and $48,300 in June (both purchases paid in cash) $48,300 in June (both purchases paid in cash) q Has an April 1 cash balance of $40,000 q Has an April 1 cash balance of $40,000 LO 2 The Cash Budget Schedule of Expected Schedule of Expected Cash Collections. Cash Collections. LO 2 The Cash Budget Schedule of Expected Schedule of Expected Cash Disbursements. Cash Disbursements. Direct Labour Budget. Manufacturing Overhead Budget. Selling and Administrative Expense Budget. LO 2 The Cash Budget Because Royal maintains a cash balance of $30,000, the company must borrow the $50,000 on its line-of-credit. $50,000 LO 2 The Cash Budget Ending cash balance for April is the beginning May balance. LO 2 The Cash Budget LO 2 The Cash Budget $50,000 × 16% × 3/12 = $2,000 Borrowings on April 1 and repayment on June 30. LO 2 The Budgeted Financial Statements Cash Budget om C d te e pl Budgeted Financial Statements After we complete the cash budget, we can After prepare the budgeted income statement and budgeted balance sheet for Royal. and LO 2 The Budgeted Income Statement Royal Company Budgeted Income Statement For the Three Months Ended June 30 Sales (100,000 units @ $10) Cost of goods sold (100,000 @ $4.99) Gross margin Selling and administrative expenses Operating income Interest expense Net income $ 1,000,000 499,000 501,000 260,000 241,000 2,000 $ 239,000 Sales Budget. Sales Bud...
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