Financial Managerial Accounting: P22-45A Knobbles Company’s budget committee provides

Financial Managerial Accounting
P22-45A Preparing a financial budget - schedule of cash receipts, schedule cash payments, cash budget
Knobbles Company’s budget committee provides the following information:
December 31, 2015, account balances:
Cash 23,000
Accounts Receivable 20,000
Merchandise Inventory 20,000
Accounts Payable 11,500
Salaries and Commissions Payable 2,850

Budgeted amounts for 2016: January February
Sales 80,000 81,600
Purchases 40,200 41,000
Commissions Expense 4,000 4,080
Salaries Expense 7,000 7,000
Rent Expense 2,000 2,000
Depreciation Expense 600 600
Insurance Expense 400 400
Income Tax Expense 2,200 2,200

Requirements
1. Prepare the schedule of cash receipts from customers for January and February 2016. Assume cash receipts are 60% in the month of the sale and 40% in the month following the sale.
2. Prepare the schedule of cash payments for purchases for January and February 2016. Assume purchases are paid 60% in the month of purchase and 40% in the month following the purchase.
3. Prepare the schedule of cash payments for selling and administrative expenses for January and February 2016. Assume 25% of the accrual for Salaries and Commissions Payable is for commissions and 75% is for salaries. The December 31 balance will be paid in January. Salaries and commissions are paid 70% in the month incurred and 30% in the following month. Rent and income tax expenses are paid as incurred. Insurance expense is an expiration of the prepaid amount.
4. Prepare the cash budget for January and February 2016. Assume no financing took place.
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