Use the following information to prepare the September cash budget for PTO Co. The following information relates to expected cash receipts and cash payments for the month ended September 30. Beginning cash balance, September 1, $43,000. Budgeted cash receipts from sales in September, $256,000. Raw materials are purchased on account. Purchase amounts are August (actual), $80,000, and September (budgeted), $109,000. Payments for direct materials are made as follows: 65% in the month of purchase and 35% in the month following purchase. Budgeted cash payments for direct labor in September, $33,000. Budgeted depreciation expense for September, $3,900. Other cash expenses budgeted for September, $55,000. Accrued income taxes payable in September, $10,100. Bank loan interest payable in September, $1,800.

PTO Co.

Cash Budget for the month of September

Beginning cash balance, September 1, $43,000

Budgeted cash receipts from sales      256,000

Total cash available                             $299,000

Cash Disbursements:

Payment to suppliers           $98,850

Payment to workers               33,000

Other expenses                     55,000

Income tax                               10,100

Bank loan interest                    1,800   $198,750

Ending cash balance, Sept. 30           $100,250

Explanation:

a) Data and Calculations:

Beginning cash balance, September 1, $43,000

Budgeted cash receipts from sales in September, $256,000

Raw materials are purchased on account

Purchase amounts are August (actual), $80,000, and September (budgeted), $109,000

Payments for direct materials are made as follows:

65% in the month of purchase and

35% in the month following purchase.

Budgeted cash payments for direct labor in September, $33,000.

Budgeted depreciation expense for September, $3,900.

Other cash expenses budgeted for September, $55,000.

Accrued income taxes payable in September, $10,100.

Bank loan interest payable in September, $1,800

                                        August     September

Credit purchases        $80,000     $109,000

Payments for purchases:

65% purchase month                        70,850

35% ffg month                                   28,000

Total cash payment for purchases $98,850

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