Cash budgetBasicGrenoble Enterprises had sales of $50,100 in March and $59,500 in April. Forecast sales for May, June, and July are $69,800, $80,300, and $100,100, respectively. The firm has a cash balance of $4,600 on May 1 and wishes to maintain a minimum cash balance of $4,600.

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

(1) The firm makes 22% of sales for cash, 58% 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 $1,600 per month.

(3) The firm's actual or expected purchases, all made for cash, are $50,300, $69,600, and $80,400 for the months of May through July, respectively.

(4) Rent is $2,800 per month.

(5) Wages and salaries are 8% of the previous month's sales.

(6) Cash dividends of $3,500 will be paid in June.

(7) Payment of principal and interest of $3,900 is due in June.

(8) A cash purchase of equipment costing $6,200 is scheduled in July.

(9) Taxes of $6,000 are due in June.