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Swift Shoes Inc cash budget

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Swift Shoes Inc cash budget

      

The controller of Swift Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

 

April

May

June

Sales

$100,000

$150,000

$180,000

Manufacturing costs

40,000

50,000

54,000

Selling and administrative expenses

32,000

38,000

45,000

Capital expenditures

—

—

30,000

     

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in full in the month following the sale and the remainder the following month. Depreciation, insurance, and property tax expense represent $18,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in July, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of April 1 include cash of $40,000, marketable securities of $65,000, and accounts receivable of $117,800 ($85,000 from March sales and $32,800 from February sales). Sales on account in February and March were $82,000 and $85,000, respectively. Current liabilities as of April 1 include a $50,000, 12%, 90-day note payable due June 20 and $29,000 of accounts payable incurred in March for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. It is expected that $3,500 in dividends will be received in April. An estimated income tax payment of $34,000 will be made in May. Swift Shoes’ regular quarterly dividend of $8,000 is expected to be declared in May and paid in June. Management desires to maintain a minimum cash balance of $35,000.

Instructions

1. Prepare a monthly cash budget and supporting schedules for April, May, and June 2008.

2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?

This question was answered on Jun 24, 2016.Purchase Solution @ 12 USD
Swift Shoes Inc cash budget

body preview (37 words)

xxxxx xxx xxxxxxx is not able xx maintain xxx minimum balance xx cash , the xxxxxxx xxxxx xx xxxxx on its expenses. xxx xxxxxxx costs xxx xx xxxxxxxxxxx xxxxxxx sales xxxxxx xx collected xx x more short interval

file1.xlsx preview (46 words)

Sheet1

xxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxx showing xxxx budget xxx xxxxxx xxxxx x xxx , june
particulares xxxxx xxxjune
xxxxxxx cash 40000
cash receipts :
xxxx xxxxxxxxxx xxxxx 1500018000
cash xx account sales
xxx xxxxx xxxxx xxxxx
40%xxxxx 34000xxxxx
total receipts 1010006900099000
xxxxxxxx from xxxxx
xxxxxxxxxxxxxxxxxx 1500
prepaid expense 18000 1800018000
xxxx expense:
selling xxxxxxx 32000xxxxx 45000
xxxxxxxxxxxxx xxxx17600 32800xxxxx
xxxxxxxx
income xxxxxxxx
xxxxxxxxxxxx
xxxxx expense 67600 xxxxxx108000
cash xxxxxxx33400-58200 xxxxx

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