Inventory

ACCT 504 Sample Case Study 3 On Cash Budgeting Solution

1.

CAMBRIDGE COMPANY

Cash Budget

For the Two Months of February and March

Feb Mar

Beginning cash balance $15,000 $15,000

Add: Receipts

Collections from customers 39,600 30,600

Sale of plant assets 18,525

Sale of new common stock 25,275

Cash sales 76,500 58,500

Total receipts 134,625 114,375

Total available cash 149,625 129,375

Less: Disbursements

Purchases of inventory 85,500 53,100

Operating expenses 10,125 10,125

Selling and administrative expenses 18,750 18,750

Dividends 28,500

Equipment purchase 9,000

Total disbursements 142,875 90,975

Excess (deficiency) of available cash over disbursements 6,750 38,400

Financing

Borrowings 8,250

Repayments (8,415)*

Ending cash balance $15,000 $29,985

*8,250 × 12% × 2/12 = $165 + $8,250 = $8,415

Schedule of Expected Collections from Customers

Credit sales Feb Mar

Jan (45,000 × 40%) $18,000

Feb ($36,000 x 60%), Mar ($36,000 x 40%) 21,600 $ 14,400

Mar ($27,000 × 60%) 16,200

Total collections $39,600 $30,600

Schedule of Expected Payments for Purchase of Inventory

Inventory purchases Feb Mar

Jan ($97,500 x 60%) $58,500

Feb ($67,500 x 40%), Mar ($67,500 x 60%) 27,000 $40,500

Mar ($31,500 x 40%) 12,600

Total payments $85,500 $53,100

Oxford Company

Cash Budget

For the Two Months of August and September

August September

Beginning cash balance $10,000 $10,000

Add: Receipts

Collections from customers 26400 20400

Sale of plant assets 12,350

Sale of new common stock 16,850

Cash sales 51000 39000

Total receipts 89750 76250

Total available cash 99750 86250

Less: Disbursements...