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Required 1: May and June is Incorrect

Required 2A: October (Budgeted cost of good sold) is incorrect

Required 3: Too many is incorrect!

Scott Products Inc. a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Scott Products has had to borrow money during the third quarter to support peak sales of back- to-school materials, which occur during August. The following information has been assembled to assist in preparing a cash budget for the quarter a. Budgeted monthly absorption costing income statements for July through October are as follows: July August September October Sales $40,000 $70,000 $50,000 $45,000 Cost of goods sold 24.000 42.000 30, eee 27.ee Gross margin 16,000 28,000 20,000 18,000 Selling and administrative expenses: Selling expense 7,200 11,700 8,500 7.30 Administrative expense" 5,600 7,200 6,100 5,900 Total expenses 12,880 18,900 14,6ee 13,200 Operating income $ 3, 2ee $ 9, 100 $5,400 $ 4,800 * Includes $2.000 depreciation each month b. Sales are 20% for cash and 80% on credit. c. Credit sales are collected over a three-month period, with 10% collected in the month of sale, 70% in the month following sale, and 20% in the second month following sale. May sales totalled $30,000, and June sales totalled $36,000 wer 200 22,00 200 2.000 * Includes $2.000 depreciation each month b. Sales are 20% for cash and 80% on credit c. Credit sales are collected over a three-month period, with 10% collected in the month of sale, 70% In the month following sale, and 20% in the second month following sale. May sales totalled $30,000, and June sales totalled $36,000 d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases is paid for in the month of purchase. The remaining 50% is paid in the following month Accounts payable for inventory purchases at June 30 total $11700. e. The company maintains its ending inventory levels at 75% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $18,000. f Land costing $4,500 will be purchased in July 9. Dividends of $1,000 will be declared and paid in September h. The cash balance on June 30 is $8,000, the company must maintain a cash balance of at least this amount at the end of each month 1. The company has an agreement with a local bank that allows the company to borrow up to a total loan balance of $40,000. The Interest rate on these loans is 1% per month. All borrowing is done at the beginning of a month. The company would, as far as it is able, repay the loan at the end of each month interest must be paid at the end of each month based on the outstanding loans for that month. There are no loans outstanding as at June 30. Required: 1. Prepare a schedule of expected cash collections for July, August, and September and for the quarter in total squired 1. Prepare a schedule of expected cash collections for July, August, and September and for the quarter in total. July August September Quarter 8,000S 14,000 $ 10,000 $ 32.000 $ 0 Collections on sales: Cash sales Credit sales May Juno July August September Total cash collections 3,200 22,400 5,600 5,400 39 200 4,000 59.500 0 32,000 44.800 4,000 112,800 $ 11.2005 42,000 $ 2. Prepare the following for merchandise inventory a. A merchandise purchases budoet for July August and September 2. Prepare the following for merchandise inventory a. A merchandise purchases budget for July August, and September October Merchandise Purchases Budget July August September Budgeted cost of goods sold $ 24,000 s 42,000 $ 30,000 Add: Desired ending inventory 31,500 22,500 20.250 Total needs 55,500 64,500 50 250 Loss Beginning inventory 18,000 31,500 22,500 Required inventory purchases $ 37,500 $ 33,000 $ 27,750 b. A schedule of expected cash disbursements for merchandise purchases for July, August, and September and for the quarter in total S July 11,700 18,750 Accounts payable, June 30 July purchases August purchases September purchases Total cash disbursements August September Quarter $ 11,700 18.750 37.500 16,500 16,500 33,000 13,875 13.875 35,250 $ 30,375 S 06.075 S 30,450 $ 3. Prepare a cash budget for July August, and September and for the quarter in total (Round your intermediate calculations and final answers to the nearest whole dollar. Cash deficiency, repayments and interest should be indicated by a minus sign.) Scott Products, Inc Cash Budget For the Quarter Ended September 30 3. Prepare a cash budget for July August, and September and for the quarter in total, (Round your intermediate calculations and the answers to the nearest whole dollar. Cash deficiency, repayments and interest should be indicated by a minus sign.) 8,000 Scott Products, Inc. Cash Budget For the Quarter Ended September 30 July August September Quarter Cash balance, beginning $ 8,000 $ 8,000 $ 8,000 s Add collections from salos Total cash available 3.000 8.000 3,000 8,000 Los disbursements For inventory purchases 30.450 35,250 30,375 98,075 For selling expenses For administrative expenses For land 4,500 4,500 For dividends 1.000 1.000 Total disbursements 34,950 35.250 31,375 101,575 Excess (deficiency of cash available over disbursements (26.950) (27.250) (23,375) (93,575) 9. 30,375 90,075 4,5001 4,500 For selling expenses For administrativo expenses For land For dividends Total disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayment Interest Total financing Cash balance, ending 34,950 (26,950) 35,250 (27.250) 1,000 31,375 (23,375) 1,000 101,575 (93,575) 0 0 0 (27.250) s S (26,950) $ (23,375) S (93,575)

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