Cash Budget: Basic

Grenoble Enterprises had sales of $$50,000$ in March and $$60,000$ in April. Forecast sales for May, June, and July are $$70,000,$ $$80,000,$ and $$100,000,$ respectively. The firm has a cash balance of $$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 $20\%$ of sales for cash, $60\%$ are collected in the next month, and the remaining $20\%$ 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 $$50,000$ $$70,000$ and $$80,000$ for the months of May through July respectively

$4$ Rent is $3,000$ per month

$5$ Wages and salaries are $10\%$ of the previous month's sales

$6$ Cash dividends of $3,000$ will be paid in June

$7$ Payment of principal and interest $4,000$ is due in june

$8$ a cash purchase of equipment costing $6,000$ is scheduled in july

$9$ taxes of $6,000$ are due in june