Prepare McCracken”s cash budget for the month of May. Use good form. McCracken expects to have… 1 answer below »

The following information is budgeted for McCracken Plumbing Supply Company for next quarter:

 

April

May

June

Sales

$110,000

$130,000

$180,000

Merchandise purchases

$85,000

$92,000

$105,000

Selling and administrative expenses

$50,000

$50,000

$50,000

All sales at McCracken are on credit. Forty percent are collected in the month of sale, 58% in the month following the sale, and the remaining 2% are uncollectible. Merchandise purchases are paid in full the month following the month of purchase. The selling and administrative expenses above include $8,000 of depreciation on display fixtures and warehouse equipment. All other selling and administrative expenses are paid as incurred. McCracken wants to maintain a cash balance of $15,000. Any amount below this can be borrowed from a local bank as needed in increments of $1,000. All borrowings are made at month end.

Required:

Prepare McCracken”s cash budget for the month of May. Use good form. McCracken expects to have $24,000 of cash on hand at the beginning of May.