Financial Budgeting and Cash Management for Tucson Tortilla

School: California Maritime Academy - Course: ACCOUNTING 2167 - Subject: Accounting

1.Suppose Tuscon Tortilla collects 85% of their credit sales from the previous month and 14% from two months ago. The remaining 1% is bad debt that they don't collect.See the sales budget on the far right for the sales budget.Credit sale were $500,000 for December and $480,000 for November. Prepare the cash collections budget for January, February, and March, as well as the summary for the first quarter. 2. Tuscon Tortilla does not pay taxes and insurance every month.Instead of paying once a month, they divide these expense into two semiannual payments in January and July.Depreciation is not a cash expense.Using the manufacturing overhead budget on the far right, create a cash payment budget for manufacturing overhead. 3. Using the operating expense budget on the lower right, create a cash payment budget for operating expenses.Note that depreciation and bad debt expenses are not cash expenses.You will have to scroll down a bit to see Part 3.

Part 1 Tucson Tortilla Cash Collections Budget For the Quarter Ended March 31 Month JanuaryFebruary Cash sales in current month from sales budget$120,000 $80,000 Collection on credit sales: 85% of credit sales made one month ago425,000408,000 14% of credit sales made two months ago67,20070,000 Total cash collections$612,200 $558,000 Part 2 Cash payments for manufacturing overheadManufacturing OverheadTotal manufacturing overhead $102,500 $81,250 $10,000 $10,000 Less: Property tax and insurance 3,0003,000 180000 Cash payments for manufacturing overhead 107,50068,250