Cash
budget—Basic
??Grenoble Enterprises had sales of
$49,600 in March and
$60,200in April. Forecast sales for? May, June, and July are
$69,800?,$80,200?,and
$ 99 comma 500$99,500?,
respectively. The firm has a cash balance of
$ 4 comma 500$4,500
on May 1 and wishes to maintain a minimum cash balance of
$ 4 comma 500$4,500.
Given the following? data, prepare and interpret a cash budgetfor the months of? May, June, and July.
?(1) The firm makes
22 %22%
of sales for? cash,
61 %61%
are collected in the next? month, and the remaining
17 %17%
are collected in the second month following sale.??
?(2) The firm receives other income of
$ 2 comma 500$2,500
per month.??
?(3) The? firm's actual or expected? purchases, all made for?cash, are
$ 50 comma 400$50,400?,
$ 69 comma 500$69,500?,
and
$ 79 comma 600$79,600
for the months of May through? July, respectively.??
?(4) Rent is
$ 3 comma 500$3,500
per month.??
?(5) Wages and salaries are
12 %12%
of the previous? month's sales.??
?(6) Cash dividends of
$ 2 comma 600$2,600
will be paid in June.??
?(7) Payment of principal and interest of
$ 3 comma 800$3,800
is due in June.??
?(8) A cash purchase of equipment costing
$ 5 comma 700$5,700
is scheduled in July.??
?(9) Taxes of
$ 6 comma 500$6,500
are due in June.
