Ledford Corporation has the following information available from various schedules to prepare its cash budget for the June:
Receipts:
Sales (terms 2/10, net 30): May $90,000, June $100,000, July $120,000
Collection pattern: 65% in month of sale, 70% take the discount 35% in month after sale
Income from investments: May $500; June $750; July $350
Disbursements: all expenses are paid for when incurred. Materials are purchased and paid for in the month before they are used.

Required:
(1) Prepare the cash budget for June
(2) While you are not asked to prepare a budgeted cash flow statement, what similarities, if any, are there between the cash budget and a Statement of Cash Flow prepared under the direct method?

Question

Ledford Corporation has the following information available from various schedules to prepare its cash budget for the June:
Receipts:
Sales (terms 2/10, net 30): May $90,000, June $100,000, July $120,000
Collection pattern: 65% in month of sale, 70% take the discount 35% in month after sale
Income from investments: May $500; June $750; July $350
Disbursements: all expenses are paid for when incurred. Materials are purchased and paid for in the month before they are used.
 
Required:
(1) Prepare the cash budget for June
(2) While you are not asked to prepare a budgeted cash flow statement, what similarities, if any, are there between the cash budget and a Statement of Cash Flow prepared under the direct method?

Quizplus · Accepted Answer

The Answer of Ledford Corporation has the following information available from various schedules to prepare its cash budget for the June:
Receipts:
Sales (terms 2/10, net 30): May $90,000, June $100,000, July $120,000
Collection pattern: 65% in month of sale, 70% take the discount 35% in month after sale
Income from investments: May $500; June $750; July $350
Disbursements: all expenses are paid for when incurred. Materials are purchased and paid for in the month before they are used.
 
Required:
(1) Prepare the cash budget for June
(2) While you are not asked to prepare a budgeted cash flow statement, what similarities, if any, are there between the cash budget and a Statement of Cash Flow prepared under the direct method?

Ledford Corporation Has the Following Information Available from Various Schedules