6. Farley Company has budgeted sales revenues as follows: June Credit sales $135,000...
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Accounting
6. Farley Company has budgeted sales revenues as follows:
June
Credit sales $135,000
Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are:
June $300,000
Other cash disbursements budgeted: (a) selling and administrative expenses of $55,000 which includes depreciation of $7,000, (b) dividends of $103,000 will be paid in June, and (c) purchase of equipment in June is $30,000.
The company wishes to maintain a minimum cash balance of $50,000 at the end of each month. The beginning cash balance on June 1 was $50,000.
Instructions:
Prepare a cash budget for the month of June.
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