The following information is budgeted for McCracken Plumbing Supply Corporation for next quarter: All sales at McCracken are on credit.Forty percent are collected in the month of sale,58% in the month following the sale,and the remaining 2% are uncollectible.Merchandise purchases are paid in full the month following the month of purchase.The selling and administrative expenses above include $8,000 of depreciation on display fixtures and warehouse equipment.All other selling and administrative expenses are paid as incurred.McCracken wants to maintain a cash balance of $15,000.Any amount below this can be borrowed from a local bank as needed in increments of $1,000.All borrowings are made at month end.
Required:
Prepare McCracken's cash budget for May.McCracken expects to have $24,000 of cash on hand at the beginning of May.

Question

The following information is budgeted for McCracken Plumbing Supply Corporation for next quarter:  All sales at McCracken are on credit.Forty percent are collected in the month of sale,58% in the month following the sale,and the remaining 2% are uncollectible.Merchandise purchases are paid in full the month following the month of purchase.The selling and administrative expenses above include $8,000 of depreciation on display fixtures and warehouse equipment.All other selling and administrative expenses are paid as incurred.McCracken wants to maintain a cash balance of $15,000.Any amount below this can be borrowed from a local bank as needed in increments of $1,000.All borrowings are made at month end.
Required:
Prepare McCracken's cash budget for May.McCracken expects to have $24,000 of cash on hand at the beginning of May.

Quizplus · Accepted Answer

The Answer of The following information is budgeted for McCracken Plumbing Supply Corporation for next quarter:  All sales at McCracken are on credit.Forty percent are collected in the month of sale,58% in the month following the sale,and the remaining 2% are uncollectible.Merchandise purchases are paid in full the month following the month of purchase.The selling and administrative expenses above include $8,000 of depreciation on display fixtures and warehouse equipment.All other selling and administrative expenses are paid as incurred.McCracken wants to maintain a cash balance of $15,000.Any amount below this can be borrowed from a local bank as needed in increments of $1,000.All borrowings are made at month end.
Required:
Prepare McCracken's cash budget for May.McCracken expects to have $24,000 of cash on hand at the beginning of May.

The Following Information Is Budgeted for McCracken Plumbing Supply Corporation