ABC Co., Inc. has budgeted sales revenues as follows:

June July August

Credit sales $150,000 $180,000 $ 130,000

Cash sales 125,000 250,000 160,000

Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit and 70% is paid in the month of purchase and 30% in the month following purchase. Budgeted inventory purchases are:

June $320,000

July 230,000

August 110,000

The beginning cash balance on July 1 was $40,000. Other cash disbursements budgeted:

a) selling and administrative expenses of $53,000 each month,

b) dividends of $150,000 will be paid in July, and

c) purchase of equipment in August for $50,000 cash.

The company wishes to maintain a minimum cash balance of $60,000 at the end of each month.

The company borrows money from the bank at 10% interest if necessary to maintain the minimum cash balance.

Borrowed money is repaid in months when there is an excess cash balance. Assume that borrowed money in this case is for one month.

Question 1. What is expected cash collections from customers on July? (show your calculations)

Question 2. What is expected cash payments to Suppliers on August? (show your calculations)