ReddingCompany Cash Budget
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Get Help Now!2. Redding Company has budgeted sales revenues as follows:
| June | July | August | |
| Credit sales | 135,000 | 145,000 | 90,000 |
| Cashsales | 90,000 | 255,000 | 195,000 |
| Totalsales | 225,000 | 400,000 | 285,000 |
Pastexperienceindicatesthat60%ofthecreditsaleswillbecollectedinthemonthofsaleandthe remaining40%willbecollectedinthe followingmonth.Purchasesofinventoryarealloncreditand50% ispaidinthemonthofpurchaseand50%inthemonthfollowingpurchase.Budgetedinventory purchasesare:
| June | 300,000 |
| July | 250,000 |
| August | 105,000 |
Othercashdisbursementsbudgeted:(a)sellingand administrativeexpensesof$48,000 each month,(b)
dividendsof$105,000 willbepaidinJuly,and(c) purchaseofequipmentin Augustfor$30,000 cash. Thecompanywishestomaintaina minimumcashbalanceof$50,000 attheendofeachmonth.
Instructions
PrepareacashbudgetforthemonthsofJulyandAugust.
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