Cash

budgetBasic

Grenoble Enterprises had sales of $49,600 in March and $59,800 in April. Forecast sales for May, June, and July are $70,100, $80,500, and $99,900, respectively. The firm has a cash balance of $5,000 on May 1 and wishes to maintain a minimum cash balance of $5,000.

Given the following data, prepare and interpret a cash budget for the months of May, June, and July.

(1) The firm makes 21 % of sales for cash, 61% are collected in the next month, and the remaining 18% are collected in the second month following sale.

(2) The firm receives other income of $2,000 per month.

(3) The firm's actual or expected purchases, all made for cash, are $49,800, $69,600, and $79,900 for the months of May through July, respectively.

(4) Rent is $3,100 per month.

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

(6) Cash dividends of $2,600 will be paid in June.

(7) Payment of principal and interest of $4,500 is due in June.

(8) A cash purchase of equipment costing $6,500 is scheduled in July.

(9) Taxes of $6,300 are due in June.

ALL ANSWERS MUST BE ROUNDED TO THE NEAREST DOLLAR.

	March		April		May
Sales	$	49,600	$	59,800	$	70,100
Cash sales		10,416		12,558	$
Lag 1 month					$
Lag 2 months					$
Other income					$
Total cash receipts					$