Cash

budgetlong dashBasic

Grenoble Enterprises had sales of

$ 49 comma 900$49,900

in March and

$ 60 comma 300$60,300

in April. Forecast sales for May, June, and July are

$ 70 comma 400$70,400,

$ 79 comma 600$79,600,

and

$ 99 comma 800$99,800,

respectively. The firm has a cash balance of

$ 4 comma 600$4,600

on May 1 and wishes to maintain a minimum cash balance of

$ 4 comma 600$4,600.

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

(1) The firm makes

18 %18%

of sales for cash,

61 %61%

are collected in the next month, and the remaining

21 %21%

are collected in the second month following sale.

(2) The firm receives other income of

$ 1 comma 800$1,800

per month.

(3) The firm's actual or expected purchases, all made for cash, are

$ 49 comma 500$49,500,

$ 69 comma 800$69,800,

and

$ 80 comma 500$80,500

for the months of May through July, respectively.

(4) Rent is

$ 3 comma 200$3,200

per month.

(5) Wages and salaries are

12 %12%

of the previous month's sales.

(6) Cash dividends of

$ 3 comma 200$3,200

will be paid in June.

(7) Payment of principal and interest of

$ 4 comma 300$4,300

is due in June.

(8) A cash purchase of equipment costing

$ 6 comma 200$6,200

is scheduled in July.

(9) Taxes of

$ 6 comma 400$6,400

are due in June.