Problem

Kidder Company began its operations on April 1 of the current year. The Company has $296,000 in accounts receivable on April 30. Budgeted sales for May are $860,000. Kidder expects to sell 20% of its merchandise for cash. Of the remaining 80% of sales on account, 75% are expected to be collected in the month of sale and the remainder the following month.

Projected manufacturing costs for the first three months of business are $156,800, $195,200, and $217,600, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $28,800 of the estimated monthly manufacturing costs. Insurance was paid on April 1, and property taxes will be paid in November. Three-fourths of the remainder of the manufacturing costs are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.

Required: Prepare a cash budget (in good form) for the first three months of operation (i.e. April, May, June). Hint: Compute April Sales