CASH BUDGET

PROBLEM SUMMER

2013

The Controller of Dave Company has asked you to prepare a Monthly Cash Budget
for the Second
quarter of 2013. You are presented with the following information:

April May June

Budgeted Sales $ 300,000 $ 360,000 $ 380,000

Manufacturing Costs 150,000 180,000 200,000

Selling and Administrative Expenses 100,000 120,000 125,000

Capital Expenditures 90,000

The company expects to sell about 10% of its merchandise for cash in the month of
sale. The other 90 % of sales are to be collected in the following amounts: 0% in
the month of sale; 70 % in the first month after sale and 30 % in the second month
after sale.

The manufacturing costs include $ 20,000 of Depreciation in each month. The

remaining manufacturing costs represent materials and labor of which 80% is paid
in the month incurred and the remaining 20% is paid in the first month after the
purchase.

Current Assets as of March 31st include cash of $ 40,000, Marketable Securities of

$ 65,000 and Accounts Receivable of $ 370,000 ($ 280,000 of March Sales
uncollected and $ 90,000 of February Sales uncollected).
st
Current Liabilities as of March 31 include a $ 50,000 12% 90 Day Note Payable due
th
on June 20 . Both the principal and interest will be paid at the same time. Accounts
st
payable at March 31 are $ 25,000 and they are due in May. All Selling and
Administrative Expenses are paid in cash in the month incurred.

Other income includes a Dividend from the Marketable Securities of $ 3,000

which is expected to be received in April.

An estimated Income Tax payment of $ 32,000 will be paid in May.

The Company will also pay a Dividend of $ 10,000 to its

shareholders in June. Management desires to maintain a

minimum cash balance of $ 35,000

REQUIRED:

1. Prepare a Monthly Cash Budget for the Second quarter with supporting
schedules.
3. PLEASE REMEMBER to submit your projects to my NVC E-mail
dangelovich@napavalley.edu and
INCLUDE your Name in the Subject line