Reference no: EM133154591
Question - Consider the following information that will assist you in preparing a cash budget for XYZ COMPANY for the month of June:
The cash balance on June 1st is expected to be $10,000.
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May
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June
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Revenue from sales
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$35,000
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$60,000
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Purchases (merchandise)
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$17,000
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$32,000
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Traditionally, 60% of all sales are cash sales collected in the same month as the sale; the remaining 40% of all sales are collected in the month following the sale.
Also, 70% of the purchases of merchandise are paid for in the same month as the purchase; the remaining 30% of the purchases are paid for in the month following the purchase.
The following expenses are expected to be incurred in the month of June:
Wages - $18,000
Depreciation - 15,000
Office supplies - 2,000
Utilities - 4,000
Additional Information:
The company pays a commission to their sales manager equal to 5% of monthly sales revenue. The commission is paid in the month following the month to which it relates.
The company has purchased a new insurance policy with a total annual cost of $2,400. The insurance contract calls for this to be paid in equal monthly installments.
The company plans on purchasing a new computer system for $13,000. The full amount will be paid in July. However, in June, the company plans on selling their old computer system for $5,000 cash proceeds.
Required - Prepare a Cash Budget for XYZ COMPANY for the month of JUNE.
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