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4 March, 10:27

Use the following information to prepare the September cash budget for PTO Co. The following information relates to expected cash receipts and cash payments for the month ended September 30. Beginning cash balance, September 1, $40,000. Budgeted cash receipts from sales in September, $255,000. Raw materials are purchased on account. Purchase amounts are August (actual), $80,000; and September (budgeted), $110,000. Payments for direct materials are made as follows: 65% in the month of purchase and 35% in the month following purchase. Budgeted cash payments for direct labor in September, $40,000. Budgeted depreciation expense for September, $4,000. Other cash expenses budgeted for September, $60,000. Accrued income taxes payable in September, $10,000. Bank loan interest payable in September, $1,000.

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  1. 4 March, 10:35
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    Answer and Explanation:

    According to the scenario, the presentation of the September cash budget is presented below:

    September Cash Budget for PTO Co.

    Particulars Amount ($)

    Opening cash balance 40,000

    Add - Cash receipts 225,000

    Total cash receipts 265,000

    Less - Cash paid for raw material in august (80,000 * 35%) - 28,000

    Less - Cash paid for raw material in September (110,000 * 65%) - 71,500

    Less - Direct labor - 40,000

    Less - Cash expenses - 60,000

    Less - Income tax paid - 10,000

    Less - Bank interest - 1,000

    Ending cash balance 54,500

    We simply added the cash receipts as it increased the cash balance and deduct all cash payments as it decreased the cash balance
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Home » Business » Use the following information to prepare the September cash budget for PTO Co. The following information relates to expected cash receipts and cash payments for the month ended September 30. Beginning cash balance, September 1, $40,000.
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