Question

Use the following information to prepare a cash budget for the month ended on March 31 for Gado Company. The budget should show expected cash receipts and cash payments for the month of March and the balance expected on March 31.

a. Beginning cash balance on March 1, \(72,000.

b. Cash receipts from sales, \)300,000.

c. Budgeted cash payments for direct materials, \(140,000.

d. Budgeted cash payments for direct labor, \)80,000.

e. Other budgeted cash expenses, \(45,000.

f. Cash repayment of bank loan, \)20,000.

Short answer

The ending cash balance for Gado Company on March 31 will be $87,000.

Step-by-step solution

Introduction

The ending cash balance in an organization depicts the closing balance under the cash account after paying off all the necessary expenditures that occurred during a financial year.

Preparation of cash budget

Gado Company
Cash budget
For March
Particulars		Amount
Beginning cash balance	$72,000
Add: Cash receipts from sales	$300,000
Total cash available		$372,000
Cash payment for:
Direct materials	$140,000
Direct labor	$80,000
Cash expenses	$45,000
Bank loan	$20,000
Total cash payment		$285,000
Ending cash balance		$87,000