Anatolia Salon Essentials had sales of $25,000 in July and $30,000 in August. Forecast sales for

September, October, and November are $35,000, $40,000, and $50,000, respectively. The firm has a cash

balance of $2,500 on September 1 and wishes to maintain a minimum cash balance of $2,500. Given the

following data, prepare cash budget for the months of September, October, and November and calculate

the excess funds available for investment or financing required.

a) The firm makes 20% of sales for cash, 60% are collected in the next month, and the remaining 20% are

collected in the second month following sale.

b) The firm's actual or expected purchases are usually 75% of sales and made in the month of sales only.

It typically pays cash immediately for 10% of its purchases, 70% in the month following the purchase,

and the remaining after two months.

c) Rent expense is $1,500 per month.

d) Wages and salaries are 10% of the previous month's sales.

e) Depreciation of $1,000 in September, $500 in October and $700 in November will be charged.

f) Stock dividends of $2,000 and cash dividends of $1,500 were declared in September and will be paid in

October. Moreover, the firm receives dividends from its subsidiaries of $1,000 per month.

g) Anatolia has some long-term investments in bonds and will receive interest of $1,000 in September.

Payment of principal and interest of $4,000 is due on its own issued bonds in October.

h) A cash purchase of equipment costing $6,000 is scheduled in November.

i) Taxes of $6,000 are due in October.

(11)