Following are the budgeted income statements for the second quarter of 2016 for SeaTech, Inc.: April May June
Sales $ 224,000 $ 272,000 $ 304,000
Cost of goods sold* 153,600 182,400 201,600
Gross profit $ 70,400 $ 89,600 $ 102,400
Operating expenses† 35,200 40,000 43,200
Operating income $ 35,200 $ 49,600 $ 59,200
Includes all product costs (i. e., direct materials, direct labor, and manufacturing overhead).
Includes all period costs (i. e., selling, general, and administrative expenses).
The company expects about 30% of sales to be cash transactions. Of sales on account, 60% are expected to be collected in the first month after the sale is made, and 40% are expected to be collected in the second month after sale. Depreciation, insurance, and property taxes represent $19,200 of the estimated monthly cost of goods sold and $12,800 of the estimated monthly operating expenses. The annual insurance premium is paid in January, and the annual property taxes are paid in August. Of the remainder of the cost of goods sold and operating expenses, 80% are expected to be paid in the month in which they are incurred, and the balance is expected to be paid in the following month.
Current assets as of April 1, 2016, consist of cash of $22,400 and accounts receivable of $239,680 ($167,776 from March credit sales and $71,904 from February credit sales). Current liabilities as of April 1 consist of $28,800 of accounts payable for product costs incurred in March; $7,360 of accrued liabilities for operating expenses incurred in March; and a $64,000, 10%, 120-day note payable that is due on April 17, 2016.
An estimated income tax payment of $64,000 will be made in May. The regular quarterly dividend of $25,600 is expected to be declared in May and paid in June. Capital expenditures amounting to $27,520 will be made in April.
NOTE: THE NUMBERS IN THE CHART ARE CORRECT
Required: a. Complete the monthly cash budgets for the second quarter of 2016 using the following format. Note that the ending cash balance for June is provided as a check figure. (Use 360 days year for calculations.) SEATECH Cash Budget For the months of April, May, and June, 2016 May April S 22,400 June Beginning cash balance Cash Receipts: From cash sales made in current month From credit sales made in: 67,200 81,600 91,200 71,904 100,666 February March April May 62,720 114,240 S 262,170 S 175,680 268,160 94,080 Total cash available Cash Disbursements: For cost of goods sold/operating expenses incurred in: March S 36,160 125,440 April 31,360 152,320 May 38,080 170,240 June For payment of note payable and interest For capital expenditures For payment of income taxes For payment of dividends Total disbursements Ending cash balance 66,133 27,520 64,000 25,600 233,920 36,267 S 255,253 S 247,680 6,917 S 72,000) S