(1) Budgeted sales and merchandise purchases for the last quarter of the previous year and for the...

Question:

(1) Budgeted sales and merchandise purchases for the last quarter of the previous year and for the upcoming year are provided above.

(2) Cash sales represent 10% of the total sales for a quarter. The company normally collects credit sales in the following manner: 35% of a quarters' sales by the end of the quarter and 65% by the end of the following quarter.

(3) Purchases of merchandise are paid for in the following manner: 40% in the quarter of purchase and the remainder in the quarter following purchase.

(4) Operating expenses for 20x2 are budgeted quarterly at $75,000 plus 15% of sales. Of the fixed portion, $15,000 is depreciation expense. These expenses are paid in the quarter in which they are incurred.

(5) Cash dividends of $12,500 will be paid each quarter. In addition, the company expects to purchase equipment in cash of $60,000 in the second quarter and $60,000 in the fourth quarter.

(6) The balance in cash at the beginning of 20x2 is $25,000. The company is required to maintain a minimum cash balance of $20,000 at the end of each quarter. Any borrowing that the company requires will take place at the beginning of the quarter and any repayments that will be made will take place at the end of the quarter. The annual interest rate on all loans is 12%. All loans and repayments of principal must be made in multiples of $1,000. The actual interest on any loans outstanding is paid at the end of each quarter.

(1) Budgeted sales and merchandise purchases for the last quarte

Required
Prepare a cash budget by quarter and in total for the year 20x2. Round all calculations to the nearest wholedollar.

Cash Budget
A cash budget is an estimation of the cash flows for a business over a specific period of time. These cash inflows and outflows include revenues collected, expenses paid, and loans receipts and payment. Its primary purpose is to provide the...