Sony Stereo began operations in March. March sales were $180,000 and purchases were $100,000. The beginning cash balance for April is $3,000. Sony’s owner approaches the bank for an $80,000 loan to be made on April 2 and repaid on June 30. The bank’s loan officer asks the owner to prepare monthly cash budgets. Its budgeted sales, merchandise purchases, and cash payments for other expenses for the next three months follow.

All sales are on credit where 90% of credit sales are collected in the month following the sale, and the remaining 10% is collected in the second month following the sale. All merchandise is purchased on credit; 80% of the balance is paid in the month following a purchase, and the remaining 20% is paid in the second month.

Required

Prepare the following for the months of April, May, and June.
1. Schedule of cash receipts from sales.
2. Schedule of cash payments for direct materials.
3. Cash budget.

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May $300,000 180,000 Budgeted April $220,000 210,000 June $380,000 220,000 Sales Merchandise purchases Cash payments Salaries 16,000 36,000 2,000 17,000 18,000 Rent 36,000 2,000 36,000 2,000 80,000 Insurance Repayment of loan Interest on loan 800 800 800