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question schedule of expected cash collections schedule of expected cash disbursemen 4291123


Schedule of Expected Cash Collections

Schedule of Expected Cash Disbursements –

Merchandise Purchases Schedule of Expected Cash Disbursements –

Operating Expenses Combined Cash Budget

Budgeted Balance Sheet

Bobcat Boutique is a merchandising business located downtown in San Marcos, Texas. The owners are Texas State alumni and they would like to maximize their profits. They understand that accurate budgeting will help obtain this goal. The company is completing its second year of operations and is preparing to build its master budget for the second quarter. The budget will detail each quarter’s activity and the total for the quarter.

The master budget will be based on the following information:

Sales were budgeted at $50,000 for September.

Expected sales are $60,000 for October,

$72,000 for November, $90,000 for December,

$48,000 for January.

The gross margin is 25% of sales. Sales are projected to be 60% for cash and 40% on credit.

Credit sales are collected in the month following the sale. The September accounts receivable are a result of the September credit sales. There are no bad debts.

Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold. Merchandise Inventory Purchases are paid as follows; 50% of a month’s inventory purchases is paid for in the month of purchase; the other 50% is paid for in the following month.

The accounts payable at September 31 are the result of September purchases of inventory. Monthly operating expenses are as follows: commissions are 12% of sales; rent is $2,500 per month, other operating expenses (excluding depreciation) are 6% of sales. Assume these expenses are paid monthly. Deprecation is $900 per month.

Equipment costing $1,500 will be purchased for cash in October.

Income tax is estimated to be 28% of operating income. Estimated taxes are accrued each month and paid in cash in the last month of the quarter.

Management would like to maintain a minimum cash balance of at least $3,000 at the end of each month. The boutique has an agreement with a local bank that allows them to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000.

The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. They would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. T

he balance sheet as of September 31, is as follows:

Assets September 31

Cash $8,000

Accounts Receivable 20,000

Inventory 36,000

Plant & Equipment,

net 120,000

Total assets $184,000

Liabilities & Equity Accounts Payable $21,750

Retained Earnings 162,250

Total liabilities & equity $184,000






Collections of:





Cash Sales





Credit Sales





Total Collections










Payments of:





Current Month Purchases





Prior Month Purchases





Total Payments – Merchandise Inventory Purchases



















Other Operating Expenses





Total Payments – Operating Expenses










Beginning Cash Balance





Cash Collections





Cash Available





Cash Payments:





Merchandise Inventory Purchases





Operating Expenses





Equipment Purchase





Income Taxes





Ending Cash Balance before Financing










New Borrowings





Debt Repayments





Interest Payments





Ending Cash Balance after Financing















Accounts Receivable










Plant & Equipment, net





Total assets










Accounts Payable





Retained Earnings





Total liabilities & equity








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