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Cash Budget For the Three Months Ending July 31 Estimated cash receipts from: Cash sales Collection of accounts receivable Catimated cash payments for: Manufacturing costs

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Cash Budget For the Three Months Ending July 31 Estimated cash receipts from: Cash sales Collection of accounts receivable Catimated cash payments for: Manufacturing costs Other purposes: Income tax and administrative expenses Dividends Cash increase or (decrease) Cash balance at beginning of month Cash balance at end of month The controlier of Sonoma Housewares Inc. instnucts you to prepare a monthly cash budget for the next three months. You are pregented with the foliowing budget information: The company expects to sell about 12% of its merchandise for cash. Of sales on occount, 60% are expected to be coliected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000 of the estimated monthly manufocturing costs. The ancual insurance premium is paid is September, and the annual property taxes are paid in November or the remainder of the manufacturing costs, 75% are expected to be pald in the month in which they are incurred and the balance in the following month. Curremt assets as of May 1 include cash of $44,000, marketabie securities of $62,000, and accounts feceivable of $137,800 ( $101,000 from April sales and $36,000 trom March sales). Sales on account for March and Apri were $92,000 and $101,000, respectively. Current habilities as of May 1 indude $15,000 of accounts payable incurred in Apprit for manufacturing cotts. AH selhing and odministrative expences are paid in cash in the penod thev are incurred. An estimated incorne tax payment of 318 , 0oo will be mado in June, Sonoma's regular quarterly dividend of $10,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash baiance of $34,000. Required: 1. Prepare ar monthly cash budget and supporting schedules for May, June, and Juhy. Input alf amounts as positive values excepe overall cash docrease and deficiency which should be indicated with a minus sign. 2. The budget indicates that the minimum cash balance: be maintained in July, This situation can be corrected by and/er by the of the marketable securities, if they are held for wich purposes. At the end of May and June, the cash balance will the minimum desured balance

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