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Case Study: Cash Budget For Cotton And Linen

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Homework 10
1) Decision Case 22-2

1. a) Cash Budget for Cotton and Linen

Anne Manuson
Cash Budget - Cotton
4 months until 31st December 2011
Beginning Cash Balance 25
Cash receipts:
Cotton Sales (25 x (0.9x$20))
450
Cash available 475
Cash disbursement
- Account Payable
Total Cash Disbursement
74

(74)
Budgeted Cash Income $401

Anne Manuson
Cash Budget - Linen
4 months until 31st December 2011
Beginning cash balance 25
Cash receipts: Linen sales (15 x (0.90 x $50)) 675
Cash available 700
Cash disbursements: Account payable Cost of linen ($15 x 18) Purchase of new loom
Total cash disbursements 74 270 1,000 (1,344)
Cash balance before financing (644)
Financing of cash deficiency:
Borrowing
Principal payment
Interest payment ($1,000 × 0.18 × 4/12) 1,000 (200) (60)
Total effect of financing 740
Budgeted Cash Income $ 96

b) Income Statements

Anne Magnuson
Budgeted Income Statement - Cotton
4 months until 31st December 2011

Sales ($20 x 25) 500
Less: COGS ($7 x 25) (175)
Gross Profit 325
Less: Operating Expenses
Sales Commission ($20 × 10% x 25)
Depreciation (Old loom: $10 x 4 months) 50 40 (90)
Net Income $ 235

Anne Magnuson, Weaver …show more content…

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