You are provided with the following information taken from Splish Brothers Inc.’s March 31, 2022, balance sheet. Cash $ 12,330 Accounts receivable 20,370 Inventory 36,900 Property, plant, and equipment, net of depreciation 120,500 Accounts payable 22,640 Common stock 153,800 Retained earnings 12,460 Additional information concerning Splish Brothers Inc. is as follows. 1. Gross profit is 26% of sales. 2. Actual and budgeted sales data: March (actual) $47,000 April (budgeted) 73,100 3. Sales are both cash and credit. Cash collections expected in April are: March $18,800 (40% of $47,000) April 43,860 (60% of $73,100) $62,660 4. Half of a month’s purchases are paid for in the month of purchase and half in the following month. Cash disbursements expected in April are: Purchases March $22,640 Purchases April 28,310 $50,950 5. Cash operating costs are anticipated to be $11,510 for the month of April. 6. Equipment costing $2,650 will be purchased for cash in April. 7. The company wishes to maintain a minimum cash balance of $12,970. An open line of credit is available at the bank. All borrowing is done at the beginning of the month, and all repayments are made at the end of the month. The interest rate is 14% per year, and interest expense is accrued at the end of the month and paid in the following month. Prepare a cash budget for the month of April. Determine how much cash Splish Brothers Inc. must borrow, or can repay, in April.

Half of a month’s purchases are paid for in the month of purchase and half in the following month. Cash disbursements expected in April are:

Purchases March

Purchases April

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You are provided with the following information taken from Splish Brothers Inc.’s March 31, 2022, balance sheet.

Cash		$ 12,330
Accounts receivable		20,370
Inventory		36,900
Property, plant, and equipment, net of depreciation		120,500
Accounts payable		22,640
Common stock		153,800
Retained earnings		12,460

Additional information concerning Splish Brothers Inc. is as follows.

1.	Gross profit is 26% of sales.
2.	Actual and budgeted sales data:
	March (actual)	$47,000
	April (budgeted)	73,100

3.	Sales are both cash and credit. Cash collections expected in April are:
	March	$18,800	(40% of $47,000)
	April	43,860	(60% of $73,100)
		$62,660

5.		Cash operating costs are anticipated to be $11,510 for the month of April.
6.		Equipment costing $2,650 will be purchased for cash in April.
7.		The company wishes to maintain a minimum cash balance of $12,970. An open line of credit is available at the bank. All borrowing is done at the beginning of the month, and all repayments are made at the end of the month. The interest rate is 14% per year, and interest expense is accrued at the end of the month and paid in the following month.

Prepare a cash budget for the month of April. Determine how much cash Splish Brothers Inc. must borrow, or can repay, in April.

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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