Description
CLO 8 – Determine cash flow reporting to include its
purpose and format as it relates to statements, operating,
investing, and financial activities. Discuss the importance
of financial statement analysis in reference to decision
making and audits.
Read your textbook and other peer-reviewed publications, write
a minimum of three (3) pages of high quality well-written APA
formatted standard about the following scenario. Please keep in
mind that this assignment is quantitative, therefore do not forget
to use the figures and charts.
Built-Tight is preparing its master budget for the quarter ended
September 30. Budgeted sales and cash payments for product
costs for the quarter follow.
?
B
July
$64,000
August
$80,000
D
September
$48,000
?
1
2 Budgeted sales
3 Budgeted cash payments for
4 Direct materials
5 Direct labor
6
Factory overhead
16,160
4,040
20,200
13,440
3,360
16,800
13,760
3,440
17,200
a
Sales are 20% cash and 80% on credit. All credit sales are
collected in the month following the sale. The June 30 balance
sheet includes balances of $15,000 in cash; $45,000 in accounts
receivable; $4,500 in accounts payable; and a $5,000 balance in
loans payable. A minimum cash balance of $15,000 is required.
Loans are obtained at the end of any month when a cash
shortage occurs. Interest is 1% per month based on the
beginning-of-the-month loan balance and is paid at each month-
end. If an excess balance of cash exists, loans are repaid at the
end of the month. Operating expenses are paid in the month
incurred and consist of sales commissions (10% of sales), office
salaries ($4,000 per month), and rent ($6,500 per month).
Prepare a cash budget for each of the months of July, August,
and September. (Round amounts to the dollar.)
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