Problem:
1. East mark Stores wants to estimate cash disbursements for cash budgeting purposes for the first three months of 19B from the data given below.
(a) Cost of merchandise sold, estimated:
|
19A, December
|
$225,000
|
|
|
19B, January
|
250,000
|
|
|
February
|
280,000
|
|
|
March
|
210,000
|
|
Thirty-five percent of the cost of merchandise is to be paid for in the month of sale, and 65 percent of the cost is to be paid for in the month following the month of sale.
(b) Wages for each month are estimated as follows:
|
19A, December
|
$23,000
|
|
|
19B, January
|
26,000
|
|
|
February
|
31,000
|
|
|
March
|
210,000
|
|
Wages are all paid as incurred.
(c) Utilities are to be paid every other month at the amount of $320 per month. The first payment is to be made in February.
(d) Six months 'rent and insurance amounting to a total of $9,700 is to be paid in January.
(e) An income tax of $12,500 is to be paid in March.
(f) Depreciation on office equipment has been estimated at $7,500 for the year.
(g) New equipment costing $50,000 is to be acquired in February with a down payment of $4,000 required at date of purchase.
(h) Other operating expenses have been estimated at $2,250 per month, which is to be paid each month.
Prepare a cash disbursement budget for each of the first three months of 19B.