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Castor Incorporated is preparing its master budget. Budgeted sales and cash payments for merchandise purchases for the next three months follow Budgeted April May June Sales $ 31,500 $ 40,500 $ 24,500 Cash payments for merchandise purchases 21,200 16,300 16,700 Sales are 60% cash and 40% on credit. Sales in March were $24.500. All credit sales are collected in the month following the sale. The March 31 balance sheet includes balances of $12,500 in cash and $2,500 in loans payable. A minimum cash balance of $12,500 is required. Loans are obtained at the end of any month when the preliminary cash balance is below $12,000. Interest is 2% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If a preliminary cash balance above $12,000 at month-end exists, loans are repaid from the excess. Expenses are paid in the month incurred and include sales commissions (5% of sales), shipping (4% of sales), office salaries ($5,500 per month), and rent ($3,500 per month). (a) Prepare a schedule of cash receipts from sales for April, May, and June. (b) Prepare a cash budget for each of April, May, and June (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) * Answer is complete but not entirely correct. June 24,500 14.700 16,200 30,900 June 13.432 30.900 44,332 CASTOR INCORPORATED Schedule of Cash Receipts from Sales April May $ 31,500 $ Sales $ 40,500 Cash receipts from Merchandise $ 18,900 $ 24,300 Collections of prior period sales 9,800 12,600 28,700 Total cash receipts $ 36,900 $ CASTOR, INCORPORATED Cash Budget April May Beginning cash balance $ 12,500 $ 12,500 $ Add: Cash receipts from sales 28,700 36,900 Total cash available 41,200 49,400 Less: Cash payments for: Merchandise 21,200 16,304 Sales commissions 1,575 2,025 Shipping 1,260 1,620 Office salaries 5,500 5,500 Rent 50 138 Interest on loan 33,085 29,083 % Interest on loan 4,385 (6,885) Total cash payments 67,055 47.781 Preliminary cash balance 8,115 20,317 Additional loan (loan repayment) 4,385 (6,885) Ending cash balance 12,500 13,432 Loan balance April Loan balance - Beginning of month IS 2,500 $ 6.885 Additional loan (loan repayment) 4,385 (6.885) Loan balance - End of month s 6.885 OOOO 16,700 1,225 980 5,500 SIOIOIOXIX 0 27,905 0 52,310 16,427 > 0 16,427 May June olo 0

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