Cash Budget Assume all Office Depot stores do cash budgeting every quarter. One store is planning its cash needs for the third quarter of the year, and the following information is available to assist in preparing a cash budget. Budgeted income statements for July through October are as follows:

	July	August	September	October
Sales	$45,000	$52,000	$60,000	$75,000
Cost of goods sold	23,500	25,500	30,500	35,000
Gross profit	21,500	26,500	29,500	40,000
Less other expenses
Selling	6,000	8,000	8,500	10,500
Administrative	9,100	10,500	8,500	9,400
Total	15,100	18,500	17,000	19,900
Net income	$6,400	$8,000	$12,500	$20,100

Additional information follows: 1. Other expenses, which are paid monthly, include $3,500 of depreciation per month. 2. Sales are 44% for cash and 56% on credit. 3. Credit sales are collected 50% in the month of sale, 35% one month after sale, and 15% two months after sale. May sales were $40,000, and June sales were $42,000. 4. Merchandise is paid for 50% in the month of purchase; the remaining 50% is paid in the following month. Accounts payable for merchandise at June 30 totaled $12,000. 5. The store maintains its ending inventory levels at 30% of the cost of goods to be sold in the following month. The inventory at June 30 is $7,600. 6. An equipment note of $10,000 per month is being paid through August. 7. The store must maintain a cash balance of at least $10,000 at the end of each month. The cash balance on June 30 is $10,000. 8. The store can borrow from its bank as needed. Borrowings and repayments must be in multiples of $100. All borrowings take place at the beginning of a month, and all repayments are made at the end of a month. When the principal is repaid, interest on the repayment is also paid. The interest rate is 6% per year.

Required a. Prepare a monthly schedule of budgeted operating cash receipts for July, August, and September.

OFFICE DEPOT
Schedule of Cash Receipts
July, August, and September
	July	Aug.	Sept.
Cash sales
Current month's credit sales
Last month's credit sales
Two months' prior credit sales
Total cash receipts

b. Prepare a monthly purchases budget and a schedule of budgeted cash payments for purchases for July, August, and September. Note: Do not use any negative signs with your answers.

OFFICE DEPOT
Purchases Budget
July, August, and September
	July	Aug.	Sept.
Budgeted cost of goods sold
Plus desired ending inventory
Total inventory needs
Less beginning inventory
Budgeted purchases

OFFICE DEPOT
Schedule of Cash Disbursements for Purchases
July, August, and September
	July	Aug.	Sept.
Current month
Previous month
Total cash disbursements

c. Prepare a monthly cash budget for July, August, and September. Show borrowings from the store's bank and repayments to the bank as needed to maintain the minimum cash balance. Note: Do not use any negative signs with your answers.

OFFICE DEPOT
Cash Budget
Third Quarter
	July	Aug.	Sept.
Cash balance, beginning	10000	10017	10030
Cash receipt	43992	49788	57172
Cash available	53992	59805	67202
Cash disbursements:
Purchases	23775	25275	29425
Other expenses (less depreciation)	11600	15000	13500
Equipment note	10000	10000	0
Total disbursements	46375	50275	42925
Balance before borrowing or repayment	8617	9530	24277
Borrowings	1400	500	0
Loan repayments	0	0
Cash balance, ending	10017	10030

Please assist with loan repayment in September