=+LG 4 P4–10 Cash budget: Basic Farmers Delight Corporation reported sales of $350,000 in June,

$380,000 in July, and $390,000 in August. The forecasts for September, October, and November are $385,000, $418,000, and $429,000, respectively. The initial cash balance on September 1 is $150,000, and a minimum of $8,000 should be kept. Use the given information to compile a cash budget for the months of September, October, and November.

(1) Farmers Delight predicts that 5% of its sales will never be collected, 30% of its sales will be cash sales, and the remaining 65% will be collected in the following month.

(2) Farmers Delight receives other monthly income of $3,000.

(3) The actual or expected purchases are $150,000, $120,000, and $115,000 for the months of September to November, respectively, and 50% are paid in cash while the remainder is paid in the following month. The purchases for August were $120,000.

(4) Monthly rent is $3,500 chargeable only in October and November.

(5) Wages and salaries are 12% of the previous month’s sales.

(6) Cash dividends of $4,600 are declared and will be paid in September.

(7) Long-term loan repayment of principal and interest of $4,700 is due in October.

(8) Additional equipment costing $8,500 is ordered and scheduled to be paid for in cash in November.

(9) Taxes of $8,250 are due in November.

Personal Finance Problem