Cash

budgetBasic

Grenoble Enterprises had sales of

$50,000

in March and

$60,000

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

$70,000,

$80,000,

and

$100,000,

respectively. The firm has a cash balance of

$5,000

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

$5,000.

Given the following data, prepare and interpret a cash budget for the months of May, June, and July.(1) The firm makes

20%

of sales for cash,

60%

are collected in the next month, and the remaining

20%

are collected in the second month following sale.(2) The firm receives other income of

$2,000

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

$50,000,

$70,000,

and

$80,000

for the months of May through July, respectively.(4) Rent is

$3,000

per month.(5) Wages and salaries are

10%

of the previous month's sales.(6) Cash dividends of

$3,000

will be paid in June.(7) Payment of principal and interest of

$4,000

is due in June.(8) A cash purchase of equipment costing

$6,000

is scheduled in July.(9) Taxes of

$6,000

are due in June.

Question content area bottom

Part 1

Complete the first month of the cash budget for Grenoble Enterprises below:(Round to the nearest dollar. Please input all the values in the table before checking your answers.)

	March		April		May
Sales	$	50,000	$	60,000	$	70,000
Cash sales		10,000		12,000	$
Lag 1 month					$
Lag 2 months					$
Other income					$
Total cash receipts					$