Cash Budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: September October November Sales $107,000 $128,000 $183,000 Manufacturing costs 45,000 55,000 66,000 Selling and administrative 37,000 38,000 70,000 expenses Capital expenditures 44,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $6,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of $41,000, marketable securities of $58,000, and accounts receivable of $119,800 ($25,800 from July sales and $94,000 from August sales). Sales on account for July and August were $86,000 and $94,000, respectively. Current liabilities as of September 1 include $6,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $15,000 will be made in October. Bridgeport's regular quarterly dividend of $6,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $40,000. November For the Three Months Ending November 30 September October Estimated cash receipts from: Cash sales $ 10,700 18,300 Collection of accounts receivable 91,600 114,570 Total cash receipts 102,300 132,870 Less estimated cash payments for: Manufacturing costs $ 37,200 55,400 Selling and administrative expenses 37,000 70,000 Capital expenditures 44,000 Other purposes: Income tax Dividends 9,000 Total cash payments $ 74,200 178,400 Cash increase or (decrease) $ 28,100 $ -45,530 Plus cash balance at beginning of month 41,000 71,310 Cash balance at end of month $ 69,100 $ 25,780 Less minimum cash balance 40,000 40,000 Excess or (deficiency) 29,100 -14,220