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27 October, 07:38

Use the following information to prepare the September cash budget for PTO Manufacturing Co. The following informaition relates to expected cash receipts and cash disbursements for the month ended September 30. a. Beginning cash balance, September 1, $40,000. b. Budgeted cash receipts from sales in September, $225,000. c. 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. d. Budgeted cash disbursements for direct labor in Spetember, $40,000. e. Budgeted depricitaion expense for September, $4000f. Other cash expenses budgeted for September, $60,000g. Accrued income taxes payabel in September, $10,000h. Bank loan interest payabel in Septermber, $1,000

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  1. 27 October, 07:45
    0
    Answer and Explanation:

    The preparation of the cash budget is shown below:

    Beginning Cash Balance $40,000

    Budgeted Cash Receipts $225,000

    Total Cash Available $265,000

    Less

    Payment of Raw Mat purchases in Aug ($80,000 * 35%) $28,000.00

    Payment of Raw Mat purchases in Sep ($110,000 * 65%) $71,500

    Direct Labor Payment $40,000

    Other Cash Expenses $60,000

    Income Tax Paid $10,000

    Bank Loan Interest Paid $1,000

    Total Cash Disbursements $210,500

    Closing Cash Balance $54,500

    We simply deduct the all cash expenses from the total cash available so that the closing cash balance could come
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