Cash Budget for the Months of May, June and July based on the

information shown below.

1. Determine the Monthly Net Cash Flow.

2. Determine if the firm would have a required financing (deficit) or excess cash balance (surplus) for each

period

Month Sales Purchases

March $50,000 $50,000

April $60,000 $70,000

May $70,000 $ 50,000

June $80,000 $ 70,000

July $100,000 $ 80,000

Additional Data

1. The firm collects 20% of sales for cash; and 60% one month later and the rest two months later following the

sale (based on past history).

2. The firm will sell a machinery for cash in July for $5,000.

3. Other income will be received for cash is month for $2,000

4. The firm pays for cash for 30% of its purchases (same month) and the rest 70% of its purchases the following

month.

5. Rent will be paid each month for $3.000

6. Salaries and Wages amount to 10% of the preceding months sales

7. A principal and interest payment on an Outstanding loan is due in June of $4,000

8. The firm will pay cash dividends of $3,000 at the end of June.

9. The firm will pay stock dividends in May at $5,000

10. New equipment costing $6,000 will be purchased in July.

11. Taxes due on June will be $6,000

12. The firm has a beginning cash balance in May of $5,000.

13. The firm maintains a minimum cash balance of $ $5,000 each month.

Prepare the Cash Budget for the months of May, June and July

Analyze the results obtained in the Cash Budget in a minimum of two sentences.