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Q1) Create a cash budget for Rotor Products, Inc. for second quarter of 2006, based on following information. Marketing department has provided you with following sales estimates, all of which are for cash:

  Total sales
March 2006 (actual) $425,000
April 2006 $330,000
May 2006 $420,000
June 2006 $450,000

Company estimates its purchases at 60 percent of next month's sales, and payments for those purchases are budgeted to lag purchases by 1 month.

Various disbursements have been estimated as follows:

  April  May June
Wages\\salaries $220,000 $190,000 $190,000
Rent $14,000 $14,000 $14,000
Other Expenses $5,000 $6,000 $7,000

Additionally, a tax payment o $55,000 is due on April 15. Company's projected cash balance at beginning of April is $60,000, and company desires to maintain balance of $50,000 at the end of each month.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M921629

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