17 Cash receipts, disbursements and summary budgets LO5 Hailey's Hats manufactures and distributes hats for every imaginable occasion. Henrietta Hailey started the company in her house three years ago and has been surprised at her success. She is considering an expansion of her business and needs to prepare cash budgeting information for presentation to Second National Bank to secure a loan. Henrietta is not an accountant, so she has asked you to help her with preparing the necessary reports. Hailey's Hats began the month with a bank balance of $10000 The budgeted sales for March to June are as follows: March April May June $14000 $16500 $15500 $17 500 Sales on account 29000 30000 40000 50000 $43000 $46500 $55500 $67500 Henrietta has found that she generally collects payment for credit sales over a two-month period. Typically, 70 per cent is Cash sales Total sales collected in the month of sale and the remainder is collected in the next month. Her policy is to purchase inventory each month equivalent to 60 per cent of that month's budgeted sales. She thinks this provides her sufficient inventory levels to manage unanticipated changes in demand. Hailey's Hats pays for and each month's sales. One-half of the selling and admi inventory purchases in the month following purchase. Selling administrative expenses are budgeted to be 30 per cent of is accounted for by depreciation on Henrietta's manufacturing equipment in April at a cost of $24000 Henrietta r t receive a salary, but she does pay herself dividends as ny profitable, so Henrietta paid herself a dividend of $12500 in expenses acturing equipment. The company purchased additional does performance allows. The first quarter of the year was enrietta wants to maintain a minimum cash balance of $10000 and has established a line of credit so she can borrow of credit will be paid back Interest on the line of credit the company would make on their borrowings) money to make up any shortfall. If the company has cash on hand at the end of a month (in excess of $10000). the line will not be paid until the end of the year. (Ignore any interest