Cash Budget

The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

	June		July		August
Sales	$160,000		$185,000		$200,000
Manufacturing costs	66,000		82,000		105,000
Selling and administrative expenses	40,000		46,000		51,000
Capital expenditures	_		_		120,000

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month following the sale and the remainder the following month (second month after sale). Depreciation, insurance, and property tax expense represent $12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in February, and the annual property taxes are paid in November. 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 June 1 include cash of $42,000, marketable securities of $25,000, and accounts receivable of $198,000 ($150,000 from May sales and $48,000 from April sales). Sales on account in April and May were $120,000 and $150,000, respectively. Current liabilities as of June 1 include $13,000 of accounts payable incurred in May for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $24,000 will be made in July. Mercury Shoes' regular quarterly dividend of $15,000 is expected to be declared in July and paid in August. Management desires to maintain a minimum cash balance of $40,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for June, July, and August.

Mercury Shoes Inc.
Cash Budget
For the Three Months Ending August 31
	June	July	August
Estimated cash receipts from:
	$fill in the blank a593f706004bfe1_2	$fill in the blank a593f706004bfe1_3	$fill in the blank a593f706004bfe1_4
	fill in the blank a593f706004bfe1_6	fill in the blank a593f706004bfe1_7	fill in the blank a593f706004bfe1_8
Total cash receipts	$fill in the blank a593f706004bfe1_9	$fill in the blank a593f706004bfe1_10	$fill in the blank a593f706004bfe1_11
Less estimated cash payments for:
	$fill in the blank a593f706004bfe1_13	$fill in the blank a593f706004bfe1_14	$fill in the blank a593f706004bfe1_15
	fill in the blank a593f706004bfe1_17	fill in the blank a593f706004bfe1_18	fill in the blank a593f706004bfe1_19
			fill in the blank a593f706004bfe1_21
Other purposes:
		fill in the blank a593f706004bfe1_23
			fill in the blank a593f706004bfe1_25
Total cash payments	$fill in the blank a593f706004bfe1_26	$fill in the blank a593f706004bfe1_27	$fill in the blank a593f706004bfe1_28
	$fill in the blank a593f706004bfe1_30	$fill in the blank a593f706004bfe1_31	$fill in the blank a593f706004bfe1_32
	fill in the blank a593f706004bfe1_34	fill in the blank a593f706004bfe1_35	fill in the blank a593f706004bfe1_36
Cash balance at end of month	$fill in the blank a593f706004bfe1_37	$fill in the blank a593f706004bfe1_38	$fill in the blank a593f706004bfe1_39
	fill in the blank a593f706004bfe1_41	fill in the blank a593f706004bfe1_42	fill in the blank a593f706004bfe1_43
Excess or (deficiency)	$fill in the blank a593f706004bfe1_44	$fill in the blank a593f706004bfe1_45	$fill in the blank a593f706004bfe1_46

2. The budget indicates that the minimum cash balance be maintained in August. This situation can be corrected by and/or by the of the marketable securities, if they are held for such purposes. At the end of June and July the cash balance will the minimum desired balance.