Question & Answer: Cash receipts, disbursements and summary budgets Lós costs 9ener Income before ta Less income taxes Net inco…..

Cash receipts, disbursements and summary budgets Lós costs 9ener Income before ta Less income taxes Net income s Hats manufactures and distributes hats for Hailey’ imaginable house three occasion. Henrietta Hailey started the company in her ee years ago and has been surprised at her success She ing an expansion of her business apt needs to prepare eting information for presertatign to Second National Cash asked you to help her with preparing the necet so she National Accounts receiva teports. Hailey’s Hats began the month with a bank balance of $ Property, plant a accumulated The budgeted sales for March to June are as follo Total assets March April M $14000 $16500 $15500 $17500 Accounts payab Retained earnir Common stock Total liabilities May June Cash sales Sales on account 29000 30000 40000 50000 Total sales $43000 $46500 S55500 $67500 Henrietta has found that she generally collects payment for credit sales over a two month period.Typically collected in the month of sale and the remainder is collected in hent the next month. Her policy is to purchase inventory each month moth equivalent to 60 per cent of that month’s budgeted sales. She thinks this provides her sufficient inventory levels to manage unanticipated changes in demand. Hailey’s Hats pays for inventory purchases in the month following purchaee and administrative expenses are budgeted to be30 per cent of each month’s sales. One-half of the selling and adn Sales budg DY.First qua 20 per cent is o ch s sales Third qu Fourth . Sales are the quart the sale ve expenses is accounted for by depreciation on Henrietta’s manufacturing equipment. The company purchased additional manufacturing equipment in April at a cost of $24000) Henrietta does not receive a salary, but she does pay herself dividends as company performance allows.The first quarter of the year was very profitable, so Henrietta paid herself a dividend of€ 1250) n 2011, rela The cost in 2012.I sale Eig quarter c followin The acc to inven Selling g to $225 is depr The in The co . of $10000 and has established a line of credit so she can borrow enough money to make up any shortfall If the company has excess cash on hand at the end of a month (in excess of $10000) the line of credit will be paid back.Interest on the line of credit Henrietta wants to maintain a minimum cash ngs) will not be paid until the end of the year. (gnore any interest payments that the company would make on their borrow Chapter Twelve 1 Fixed and rolling