Sunny Corporation expects to have the following balances on July 1, 2020: Cash, $3,000; Accounts receivable,...

70.2K

Verified Solution

Question

Accounting

Sunny Corporation expects to have the following balances on July1, 2020: Cash, $3,000; Accounts receivable, $135,000; and Accountspayable, $100,000. Its budgeted sales, merchandise purchases, andvarious expenses for the next three months follow.
July August September
Sales $220,000 $300,000 $380,000
Merchandise purchases 210,000 180,000 220,000
Payroll, rent, and other expenses 96,000 41,000 51,000
20% of the sales are for cash. Of the remaining credit sales,30% are collected in the same month as the sale, and 70% arecollected the month following the sale.
All merchandise is purchased on credit. 20% of the balance ispaid in the month of the purchase, and the remaining 80% is paid inthe month following the purchase. All other cash expenses are paidin the month incurred. Included in the payroll, rent, and otherexpenses is $10,000 of depreciation expense.
The company requires a minimum cash balance of $10,000. If cashfalls below $10,000, the company borrows on a line of credit withan annual rate of interest of 12% to bring the balance to $10,000.If cash is above $10,000, the company repays as much as possible onany outstanding line of credit but does not allow cash to fallbelow $10,000. On July 1, the line of credit has a $0 balance.
Complete the following blanks to prepare the cash budget. If ablank has an amount of $0, you are required to enter 0. Note: Youhave schedules provided below the cash budget that will need to becompleted to enable you to prepare certain calculations needed forthe cash budget.
Sunny Corporation
Cash Budget
July, 2020 - September, 2020
July August September
Total cash available
Less cash payments for:
Interest expense
Total cash payments
Loan activity:
Additional loan from bank
Repayment of loan to bank
Ending cash balance
Loan balance, end of month
Schedule to Calculate Cash Sales and Credit Sales
July August September
Cash Sales
Credit Sales
Total Sales
Cash Receipts
July August September
Cash sales
Accounts receivable
credit sales
credit sales
credit sales
Total cash receipts
Cash payments for Merchandise Purchases
July August September
Accounts payable
merchandise purchases
merchandise purchases
merchandise purchases
Total cash payments for merchandise purchases

Answer & Explanation Solved by verified expert

3.9 Ratings (639 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Sunny Corporation expects to have the following balances on July1, 2020: Cash, $3,000; Accounts receivable, $135,000; and Accountspayable, $100,000. Its budgeted sales, merchandise purchases, andvarious expenses for the next three months follow.JulyAugustSeptemberSales$220,000$300,000$380,000Merchandise purchases210,000180,000220,000Payroll, rent, and other expenses96,00041,00051,00020% of the sales are for cash. Of the remaining credit sales,30% are collected in the same month as the sale, and 70% arecollected the month following the sale.All merchandise is purchased on credit. 20% of the balance ispaid in the month of the purchase, and the remaining 80% is paid inthe month following the purchase. All other cash expenses are paidin the month incurred. Included in the payroll, rent, and otherexpenses is $10,000 of depreciation expense.The company requires a minimum cash balance of $10,000. If cashfalls below $10,000, the company borrows on a line of credit withan annual rate of interest of 12% to bring the balance to $10,000.If cash is above $10,000, the company repays as much as possible onany outstanding line of credit but does not allow cash to fallbelow $10,000. On July 1, the line of credit has a $0 balance.Complete the following blanks to prepare the cash budget. If ablank has an amount of $0, you are required to enter 0. Note: Youhave schedules provided below the cash budget that will need to becompleted to enable you to prepare certain calculations needed forthe cash budget.Sunny CorporationCash BudgetJuly, 2020 - September, 2020JulyAugustSeptemberTotal cash availableLess cash payments for:Interest expenseTotal cash paymentsLoan activity:Additional loan from bankRepayment of loan to bankEnding cash balanceLoan balance, end of monthSchedule to Calculate Cash Sales and Credit SalesJulyAugustSeptemberCash SalesCredit SalesTotal SalesCash ReceiptsJulyAugustSeptemberCash salesAccounts receivablecredit salescredit salescredit salesTotal cash receiptsCash payments for Merchandise PurchasesJulyAugustSeptemberAccounts payablemerchandise purchasesmerchandise purchasesmerchandise purchasesTotal cash payments for merchandise purchases

	July	August	September
Sales	$220,000	$300,000	$380,000
Merchandise purchases	210,000	180,000	220,000
Payroll, rent, and other expenses	96,000	41,000	51,000