Valley Trails is preparing the Cash Budget for the upcoming period, and is concerned about their ability to meet their financial obligations in the short term. Following is information relating to Valley's financial performance:
Beginning-of-period balances:
Accounts Receivable: $54,000
Accounts Payable: $27,000
Accumulated Factory Depreciation: $288,000
Cash: $13,500
Estimates for end-of-period balances:
Accounts Receivable: $67,500
Accounts Payable: $18,000
Accumulated Factory Depreciation: $296,000
Budgeted activity levels for the period:
Sales: $250,000
Purchases of Direct Materials: $44,800
Direct Labor Wages: $75,000
Manufacturing Overhead: $25,000
Selling and Administrative Expenses: $42,000
Except for purchases of direct materials, all expenses are paid as incurred.
What is the budgeted ending cash balance for the period?

Question

Quizplus · Accepted Answer

Cash received from Sales = Sales + Beginning A/R - Ending A/R
= $250,000 + 54,000 - 67,500 = $236,500
Cash paid for materials = Purchases + Beginning A/P - Ending A/P
=$44,800 + 27,000 - 18,000 = $53,800
Cash Paid for Manufacturing Overhead =
Total Overhead - Depreciation (Ending Accumulated - Beginning Accumulated)
= $25,000 - (296,000 - 288,000) = $17,000
Total cash paid=
$53,800 + 17,000 + 75,000 Direct Labor wages + 42,000 Selling and Administrative Expenses
= $187,800
Net Cash Inflow for period: $236,500 - $187,800 = $48,700
Ending Cash Balance: $13,500 + $48,700 = $62,200

Valley Trails Is Preparing the Cash Budget for the Upcoming