Budgeted Sales and cash receipts for the second quarter are:

Sales

Cash Receipts

April

$1,150,000

$940,000

May

1,250,000

1,050,000

June

1,400,000

1,210,000

July

1,500,000

Cost of goods sold is estimated to equal 40% of sales. Grow Master wants the ending inventory to be 25%

of next months cost of goods sold. All purchases are made on account. 75% of purchases are paid for in

the month of purchase and the remaining 25% in the month following purchase. Budgeted purchases for

March are $385,000

Hourly wages are expected to be 30% of monthly sales and are paid in the month incurred.

Operating expenses are expected to be $1,550,000 annually. All expenditures are paid monthly, with the

exception of property taxes, which are paid in four equal installments at the end of each quarter.

Budgeted annual property taxes are $136,000. Budgeted annual depreciation is $346,000. First quarter i

income taxes are budgeted to be $128,000 and paid in April.

Grow Master maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at

the end of the month, the company borrows against its 12% line of credit in order to maintain the

balance. All borrowings are made at the beginning of the month, and all repayments are made at the end

of the month in $1000 increments. Accrued interest is paid in full with each principal repayment.

The budgeted cash balance on April 1 is $50,000

Prepare a cash budget for the second quarter. Prepare a separate schedule for purchases and cash payments.

(

ck figues: Budgeted May purchases, $515,000; Budgeted May cash payments, $503,750; Budgeted April cash disbursements,

$1010,750;Ending cash balance June, $170,830

)