Transcribed Image Text
Sunny Corporation expects to have the following balances on July1, 2020: Cash, $3,000; Accounts receivable, $135,000; and Accountspayable, $100,000. Its budgeted sales, merchandise purchases, andvarious expenses for the next three months follow.JulyAugustSeptemberSales$220,000$300,000$380,000Merchandise purchases210,000180,000220,000Payroll, rent, and other expenses96,00041,00051,00020% of the sales are for cash. Of the remaining credit sales,30% are collected in the same month as the sale, and 70% arecollected the month following the sale.All merchandise is purchased on credit. 20% of the balance ispaid in the month of the purchase, and the remaining 80% is paid inthe month following the purchase. All other cash expenses are paidin the month incurred. Included in the payroll, rent, and otherexpenses is $10,000 of depreciation expense.The company requires a minimum cash balance of $10,000. If cashfalls below $10,000, the company borrows on a line of credit withan annual rate of interest of 12% to bring the balance to $10,000.If cash is above $10,000, the company repays as much as possible onany outstanding line of credit but does not allow cash to fallbelow $10,000. On July 1, the line of credit has a $0 balance.Complete the following blanks to prepare the cash budget. If ablank has an amount of $0, you are required to enter 0. Note: Youhave schedules provided below the cash budget that will need to becompleted to enable you to prepare certain calculations needed forthe cash budget.Sunny CorporationCash BudgetJuly, 2020 - September, 2020JulyAugustSeptemberTotal cash availableLess cash payments for:Interest expenseTotal cash paymentsLoan activity:Additional loan from bankRepayment of loan to bankEnding cash balanceLoan balance, end of monthSchedule to Calculate Cash Sales and Credit SalesJulyAugustSeptemberCash SalesCredit SalesTotal SalesCash ReceiptsJulyAugustSeptemberCash salesAccounts receivablecredit salescredit salescredit salesTotal cash receiptsCash payments for Merchandise PurchasesJulyAugustSeptemberAccounts payablemerchandise purchasesmerchandise purchasesmerchandise purchasesTotal cash payments for merchandise purchases