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A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Cash Budget 1 Quarter (000 omitted) 2 3 4 Year Cash balance, beginning Add collections from customers Total cash available 99 348 I Less disbursements: Purchase of inventory 48 30 301 121 10 90 - 13| Selling and administrative expenses Equipment purchases Dividends Total disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments (including interest) * Total financing Cash balance, ending *Interest will total $1,000 for the year. 140 Herbal Care Corp., a distributor of herb-based sunscreens, is ready to begin its third quarter, in which peak sales occur. The company has requested a $40,000, 90-day loan from its bank to help meet cash requirements during the quarter. Since Herbal Care has experienced difficulty in paying off its loans in the past, the loan officer at the bank has asked the company to prepare a cash budget for the quarter. In response to this request, the following data have been assembled: a. On July 1, the beginning of the third quarter, the company will have a cash balance of $50,500. b. Actual sales for the last two months and budgeted sales for the third quarter follow (all sales are on account): May (actual) June (actual) July (budgeted) August (budgeted) September (budgeted) $ 350,000 $ 390,000 $ 510,000 $ 720,000 $ 370,000 Past experience shows that 25% of a month's sales are collected in the month of sale, 70% in the month following sale, and 3% in the second month following sale. The remainder is uncollectible. C. Budgeted merchandise purchases and budgeted expenses for the third quarter are given below: Merchandise purchases Salaries and wages Advertising Rent payments Depreciation July $306,000 $ 45,000 $200,000 $ 8,600 $ 9,500 August $432,000 $ 58,000 $137,000 $ 8,600 $ 9,500 September $222,000 $ 59,000 $ 99,000 $ 8,600 $ 9,500 Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases on June 30, which will be paid during July, total $234,000. d. Equipment costing $10,000 will be purchased for cash during July. e. In preparing the cash budget, assume that the $40,000 loan will be made in July and repaid in September. Interest on the loan will total $1,200. Prepare a schedule of expected cash collections for July, August, and September and for the quarter it total. Herbal Care Corp. Schedule of Expected Cash Collections July August September From accounts receivable: Quarter May sales $ $ 0 June sales 0 From budgeted sales: July sales August sales September sales Total cash collections $ 0 0 0 0 Prepare a cash budget, by month and in total, for the third quarter. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Herbal Care Corp. Cash Budget July August September Quarter Beginning cash balance Add receipts: Collections from customers Total cash available 000 Less cash disbursements: Merchandise purchases Salaries and wages Advertising Rent payments Equipment purchases Total cash disbursements 0 0 0 Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments 0 Interest 0 0 Total financing Ending cash balance $ $ $ $
