8. Prepare a PR 22-58 Cash budget 1. August The controller of Mercury Shoes Inc, instructs you to prepare a monthly cash budget foto three months. You are presented with the following budget information: June $160,000 66,000 Sales. 40,000 x 519.000) July $185,000 82,000 46,000 August $200.000 1050 51.000 120000 THAT Manufacturing costs......... Selling and administrative expenses Capital expenditures The company expects to sell about 10% of its merchandise for cash. Of sales on account, estimated monthly manufacturing costs. The annual insurance premium is paid in February, and the expected to be collected in the month following the sale and the remainder the following the (second month after sale). Depreciation, insurance, and property tax expense represent $12,000 of the annual property taxes are paid in November of the remainder of the manufacturing costs, 80% expected to be paid in the month in which they are incurred and the balance in the following met counts receivable of $198.000 ($150,000 from May sales and $48,000 from April sales). Sales o Current assets as of June I include cash of $42,000, marketable securities of $25.000, 1 include $13,000 of accounts payable incurred in May for manufacturing costs. All selling an account in April and May were $120,000 and 78150,000respectively. Current liabilities as ofte administrative expenses are paid in cash in the period they are incurred. An estimated income to payment of $24,000 will be made in July, Mercury Shoes' regular quarterly dividend of $15.00 te expected to be declared in July and paid in August. Management desires to maintain a minimo cash balance of $40,000. Instructions 1. Prepare a monthly cash budget and supporting schedules for June, July, and August On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller? 2. PR 22-5B, with the following exceptions: Change the desired minimum cash balance to $50,000. Change the monthly cash sales to 20%