| cash budgets
Cash Budget
The balance sheet of Phototec, Inc., a distributor of photographic supplies, as of May 31 is given below:
PHOTOTEC, INC.
Balance Sheet May 31
Assets
Cash
. $42,000
Accounts Recievable
..70,000
Inventory
30,000
Building and equipment, net of depreciation
500,000
Total Assets
.$642,000
Liabilities and Stockholders Equity
Accounts payable, suppliers
$80,000
Note Payable
.10,000
Capital stock, no par
430,000
Retained earnings
122,000
Total liabilities and stockholders equity
$642,000
Phototec, Inc., has not budgeted previously, and for this reason it is limiting its master budget planning horizon to just one month aheadnamely June. The company has assembled the following budget data relating to June.
a. Sales are budgeted at $300,000. Of these sales, $80,000 will be for cash; the remainder will be credit sales. 30% of a months credit sales are collected in the month the sales are made, and the remainder is collected in the month following. All of the May 31 accounts receivable will be collected in June.
b. Purchases are expected to total $200,000 during June. These purchases will all be on account. 45% of all inventory purchases are paid for in the month of purchase; the remainder is paid in the following month. All of the May 31 accounts payable to suppliers will be paid during June.
c. Operating expenses for June are budgeted at $60,000, which includes depreciation of $6,000.
d. The note payable on the May 31 balance sheet will be paid during June. The companys interest expense for June (on all borrowings) will be $500, which will be paid in cash.
e. New warehouse equipment costing $70,000 will be purchased for cash during June.
f. During June, the company will borrow $100,000 from its bank by giving a new note payable to the bank for that amount. The new note payable will be due in one year.
Prepare the following schedules for June:
1. budgeted cash receipts from sales
2. budgeted cash payments for inventory purchases
3. cash budget
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