Cash Budget The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: Sales Manufacturing costs May June July $142,000 $170,000 $230,000 60,000 73,000 83,000 Selling and administrative expenses 41,000| Capital expenditures 46,000 51,000 55,000 The company expects to sell about 12% 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 (the second month following the sale). Depreciation, insurance, and property tax expense represent $6,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, 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 May 1 include cash of $54,000, marketable securities of $77,000, and accounts receivable of $158,200 ($124,000 from April sales and $34,200 from March sales). Sales on account for March and April were $114,000 and $124,000, respectively. Current liabilities as of May 1 include $15,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $20,000 will be made in June. Sonoma's regular quarterly dividend of $6,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $42,000. Required: Question Content Area 1. Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign. eBook Show Me How For the Three Months Ending July ST May June July Estimated cash receipts from: Cash sales 17,040 20,400 27,600 Collection of accounts receivable 121,000 120,208 X 142,208 Total cash receipts 138,040 140,608 X 169,808 Estimated cash payments for: Manufacturing costs 58,200 64,400 75,000 Selling and administrative expenses 41,000 46,000 51,000 Capital expenditures 55,000 Other purposes: Income tax Dividends 20,000 6,000 Total cash payments 99,200 130,400 187,000 Cash increase or (decrease) 28,424 X $ 10,208 X $ -17,192 Cash balance at beginning of month 54,000 82,424 X 92,632 X Cash balance at end of month 82,424 X 92,632 X 75,440 X Minimum cash balance 42,000 V 42,000 42,000 Excess (deficiency) 40,424 X 50,632 X 33,440 X Check My Work