Case 3 Part 1 - Cash Budget 1. Discuss the purpose of the cash budget. 2. two If the cash for the first quarter of the fiscal year indicates excess cash at the end of each of the first months, how might the excess cash be used? 3. Give an example of how the capital expenditures budget affects other operating the capital expenditures budget affects other operating budgets. The controller of the Box Company months. You are presented with the followling budget information. instructs you to prepare a monthly cash budget for the next three receivable of $90,000 ($72,000 from April sales and $18,000 from March sales) aots as of May 1 include cash of $33,000, marketable securities of $40,000, and accounts July May 86000 34000 90000 95000 44000 Sales Manufacturing Costs 39000 16000 Selling and Admin Expenses 15000 Capital Expenditures The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale) Of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current liabilities as of May 1 include $6,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $14.000 wll be made in June. Sonoma's regular qtry dividend of $5,000 is expected to be declared in June and paid in July. Instructions 1. Prepare a monthly cash budget and supporting schedules for May, June, and July 2016. 2. Management desires to maintain a minimum cash balance of $30,000. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller