CASE 01: Calgon Products, a distributor of organic beverages, needs a cash budget for September. The following information is available:

a. The cash balance at the beginning of September is $9,000.

b. Actual sales for July and August and expected sales for September are as follows: July August September Cash Sales $6,500 $5,250 $7,400 Sales on account 20,000 30,000 40,000 Total sales $26,500 $35,250 $47,400 Sales on account are collected over a three-month period as follows: 10% collected in the month of sale, 70% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.

c. Purchases of inventory will total $25,000 for September. Twenty percent of a months inventory purchases are paid for during the month of purchase. The accounts payable remaining from Augusts inventory purchases total $16,000, all of which will be paid in September.

d. Selling and administrative expenses are budgeted at $13,000 for September. Of this amount, $4,000 is for depreciation.

e. Equipment costing $18,000 will be purchased for cash during September, and dividends totaling $3,000 will be paid during the month.

f. The company maintains a minimum cash balance of $5,000. An open line of credit is available from the companys bank to bolster the cash position as needed.

REQUIREMENTS

1. Prepare a schedule of expected cash collections for September.

2. Prepare a schedule of expected cash disbursements during September for inventory purchases.

3. Prepare a cash budget for September. Indicate in the financing section any borrowing that will be needed during September