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Assume the following data for

Pet Luggage

Company:

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2(Click

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Requirements

1.	Prepare a cash budget for April for Pet Luggage.
2.	Why do Pet Luggage's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget?

Requirement 1. Prepare a cash budget for April for

Pet Luggage.

Begin the cash budget by calculating the cash available, then total disbursements, and finally the effects of financing and the ending cash balance. (Round your answers to the nearest whole dollar. Enter "0" for repayment of loan if excess cash does not exceed $10,000 at the end of April.)

Cash Budget
April 30
Cash balance, beginning
Add receipts
(1)
(2)
Total cash available for needs

Deduct disbursements
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
Total disbursements

Cash excess (deficiency)

Financing
Repayment of loan
Interest on loan
Total effects of financing
Ending cash balance, April 30

Requirement 2. Why do Pet Luggage's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget?

Pet Luggage's managers prepare a cash budget in addition to the operating income budget to (11) If Pet Luggage is profitable on an accrual accounting basis, (12) Pet Luggage's managers may then need to(13) Building a profitable operating plan(14) that adequate cash will be available.

1: More Info

Pet Luggage (PL) does not make any sales on credit. PL sells only to the public and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which PL gets the cash right away, less a 2% transaction fee.

Purchases of materials are on account. PL pays for half the purchases in the period of the purchase and the other half in the following period. At the end of March, PL owes suppliers $8,400. During April they plan to purchase direct materials worth $12,045.

PL plans to replace a machine in April at a net cash cost of $13,400.

Labor, other manufacturing costs, and nonmanufacturing costs are paid in cash in the month incurred except of course depreciation, which is not a cash flow. Depreciation is $22,500 of the manufacturing cost and $14,500 of the nonmanufacturing (fixed) cost for April.

PL currently has a $2,800 loan at an annual interest rate of 12%. The interest is paid at the end of each month. If PL has more than $10,000 cash at the end of April it will pay back the loan. PL owes $5,400 in income taxes that need to be remitted in April. PL has cash of $5,500 on hand at the end of March.

2: Reference

Revenue Budget
For the Month of April
	Units	Selling price	Total Revenues
Cat-allac	500	$215	$107,500
Dog-eriffic	215	320	68,800
Total			$176,300

Manufacturing Overhead Budget
For the Month of April
Machine setup costs	$8,900
Processing costs	42,000
Inspection costs	448
Total	$51,348

Direct Manufacturing Labor Costs Budget
For the Month of April
	Output units	DMLH	Total	Hourly
	produced	per unit	Hours	Wage Rate	Total
Cat-allac	520	3	1,560	$10	$15,600
Dog-eriffic	200	5	1,000	10	10,000
Total					$25,600

Nonmanufacturing Costs Budget
For the Month of April
Salaries	$18,200
Other fixed costs	19,000
Sales commissions	1,763
Total nonmanufacturing costs	$38,963

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