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The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

	May		June		July
Sales	$111,000		$137,000		$185,000
Manufacturing costs	47,000		59,000		67,000
Selling and administrative expenses	32,000		37,000		41,000
Capital expenditures	_		_		44,000

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 85% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of May 1 include cash of $42,000, marketable securities of $60,000, and accounts receivable of $132,600 ($97,000 from April sales and $35,600 from March sales). Sales on account for March and April were $89,000 and $97,000, respectively. Current liabilities as of May 1 include $12,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $16,000 will be made in June. Sonomas regular quarterly dividend of $10,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $33,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign.

Sonoma Housewares Inc. Cash Budget For the Three Months Ending July 31

	May	June	July
Estimated cash receipts from:
Cash sales	$fill in the blank a244e208efbbfb7_1	$fill in the blank a244e208efbbfb7_2	$fill in the blank a244e208efbbfb7_3
Collection of accounts receivable	fill in the blank a244e208efbbfb7_4	fill in the blank a244e208efbbfb7_5	fill in the blank a244e208efbbfb7_6
Total cash receipts	$fill in the blank a244e208efbbfb7_7	$fill in the blank a244e208efbbfb7_8	$fill in the blank a244e208efbbfb7_9
Estimated cash payments for:
Manufacturing costs	$fill in the blank a244e208efbbfb7_10	$fill in the blank a244e208efbbfb7_11	$fill in the blank a244e208efbbfb7_12
Selling and administrative expenses	fill in the blank a244e208efbbfb7_13	fill in the blank a244e208efbbfb7_14	fill in the blank a244e208efbbfb7_15
Capital expenditures			fill in the blank a244e208efbbfb7_16
Other purposes:
Income tax		fill in the blank a244e208efbbfb7_17
Dividends			fill in the blank a244e208efbbfb7_18
Total cash payments	$fill in the blank a244e208efbbfb7_19	$fill in the blank a244e208efbbfb7_20	$fill in the blank a244e208efbbfb7_21
Cash increase or (decrease)	$fill in the blank a244e208efbbfb7_22	$fill in the blank a244e208efbbfb7_23	$fill in the blank a244e208efbbfb7_24
Cash balance at beginning of month	fill in the blank a244e208efbbfb7_25	fill in the blank a244e208efbbfb7_26	fill in the blank a244e208efbbfb7_27
Cash balance at end of month	$fill in the blank a244e208efbbfb7_28	$fill in the blank a244e208efbbfb7_29	$fill in the blank a244e208efbbfb7_30
Minimum cash balance	fill in the blank a244e208efbbfb7_31	fill in the blank a244e208efbbfb7_32	fill in the blank a244e208efbbfb7_33
Excess (deficiency)	$fill in the blank a244e208efbbfb7_34	$fill in the blank a244e208efbbfb7_35	$fill in the blank a244e208efbbfb7_36

2. The budget indicates that the minimum cash balance

willwill not

be maintained in July. This situation can be corrected by

investingborrowing

and/or by the

purchasesale

of the marketable securities, if they are held for such purposes. At the end of May and June, the cash balance will

exceedbe short of

the minimum desired balance.

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