Built-Tight is preparing its master budget for the quarter endedSeptember 30. Budgeted sales and cash payments for product costsfor the quarter follow:
| July | August | September |
| Budgeted sales | $ | 64,000 | | $ | 80,000 | | $ | 48,000 | |
| Budgeted cash payments for | | | | | | | | | |
| Direct materials | | 16,160 | | | 13,440 | | | 13,760 | |
| Direct labor | | 4,040 | | | 3,360 | | | 3,440 | |
| Factory overhead | | 20,200 | | | 16,800 | | | 17,200 | |
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Sales are 20% cash and 80% on credit. All credit sales arecollected in the month following the sale. The June 30 balancesheet includes balances of $15,000 in cash; $45,000 in accountsreceivable; $4,500 in accounts payable; and a $5,000 balance inloans payable. A minimum cash balance of $15,000 is required. Loansare obtained at the end of any month when a cash shortage occurs.Interest is 1% per month based on the beginning-of-the-month loanbalance and is paid at each month-end. If an excess balance of cashexists, loans are repaid at the end of the month. Operatingexpenses are paid in the month incurred and consist of salescommissions (10% of sales), office salaries ($4,000 per month), andrent ($6,500 per month).
2. Prepare a cash budget for each of the monthsof July, August, and September. (Negative balances and Loanrepayment amounts (if any) should be indicated with minussign. Enter your final answers in wholedollars.)
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| | BUILT-TIGHT | | Cash Budget | | For July, August, and September | | July | August | September | | Beginning cash balance | | | | | | | | | Total cash available | | | | | Cash payments for: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total cash payments | | | | | Preliminary cash balance | | | | | Additional loan from bank | | | | | Repayment of loan to bank | | | | | Ending cash balance | 0 | 0 | 0 | | . | | Loan balance | | July | August | September | | Loan balance - Beginning of month | | | | | Additional loan (loan repayment) | | | | | Loan balance - End ofmonth | | | |
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