Cash budget for the current month July 2020

a. The cash balance on July 1 is $36,000. b. Actual sales for May and June and expected sales for July are shown below. Sales on account are collected over a three-month period as follows: 30% collected in the month of sale, 40% collected in the month following sale, and 20% collected in the second month following sale. The remaining 10% is uncollectible. May June July Cash sales $57,000 $67,000 $82,000 Sales on account $490,000 $597,000 $690,000 c. The company maintains a minimum cash balance of $20,000. An open line of credit is available from Ontario and Saskatchewan Banking Corporation (OSBC), the company's bank, to borrow from if needed, in order to maintain this minimum cash balance. d. A new high-tech food commercial food processor costing $77,000 will be bought for cash during July, and employee bonuses totalling $4,500 will be paid during the month. e. Purchase of inventory will total $300,000 for July. 25% of a month's inventory purchases are paid during the month of purchase. The accounts payable remaining from June's inventory purchases total $129,000, all of which will be paid in July. f. Selling and administrative expenses are budgeted at $481,000 for July. Of this amount $33,000 is for depreciation. Required: 1. Prepare a schedule of expected cash collections in July. 6.5 marks 2. Prepare a schedule of expected cash disbursements during July for merchandise purchases. 4 marks 3. Prepare a cash budget for July. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month (August). 9.5 marks