Cash

budgetlong dash

Basic

Grenoble Enterprises had sales of

$ 50 comma 400

in March and

$ 59 comma 700

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

$ 70 comma 100

,

$ 80 comma 100

,

and

$ 99 comma 900

,

respectively. The firm has a cash balance of

$ 4 comma 600

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

$ 4 comma 600

.

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

(1) The firm makes

25 %

of sales for cash,

60 %

are collected in the next month, and the remaining

15 %

are collected in the second month following sale.

(2) The firm receives other income of

$ 1 comma 600

per month.

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

$ 50 comma 100

,

$ 70 comma 500

,

and

$ 79 comma 900

for the months of May through July, respectively.

(4) Rent is

$ 2 comma 600

per month.

(5) Wages and salaries are

10 %

of the previous month's sales.

(6) Cash dividends of

$ 3 comma 400

will be paid in June.

(7) Payment of principal and interest of

$ 4 comma 100

is due in June.

(8) A cash purchase of equipment costing

$ 5 comma 700

is scheduled in July.

(9) Taxes of

$ 5 comma 900

are due in June.

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	$	50,400	$	59,700	$	70,100
Cash sales		12,600		14,925	$
Lag 1 month					$
Lag 2 months					$
Other income					$
Total cash receipts					$

(Round to the nearest dollar. Please input all the values in the table before checking your answers.)

	March		April		May
Disbursements
Purchases					$
Rent					$
Wages and salaries					$
Dividends					$
Principal and interest					$
Purchase of new equipment					$
Taxes due					$
Total cash disbursements					$

(Round to the nearest dollar. Please input all the values in the table before checking your answers.)

	March		April		May
Net cash flow					$
Add: Beginning cash					$
Ending cash					$
Minimum cash					$
Required total financing (notes payable)					$
Excess cash balance (marketable securities)					$

Complete the second 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.)

	April		May		June
Sales	$	59,700	$	70,100	$	80,100
Cash sales					$
Lag 1 month					$
Lag 2 months					$
Other income					$
Total cash receipts					$

(Round to the nearest dollar. Please input all the values in the table before checking your answers.)

	April		May		June
Disbursements
Purchases					$
Rent					$
Wages and salaries					$
Dividends					$
Principal and interest					$
Purchase of new equipment					$
Taxes due					$
Total cash disbursements					$

(Round to the nearest dollar. Please input all the values in the table before checking your answers.)

	April		May		June
Net cash flow					$
Add: Beginning cash					$
Ending cash					$
Minimum cash					$
Required total financing (notes payable)					$
Excess cash balance (marketable securities)					$

Complete the third 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.)

	May		June		July
Sales	$	70,100	$	80,100	$	99,900
Cash sales					$
Lag 1 month					$
Lag 2 months					$
Other income					$
Total cash receipts					$

(Round to the nearest dollar. Please input all the values in the table before checking your answers.)

	May		June		July
Disbursements
Purchases					$
Rent					$
Wages and salaries					$
Dividends					$
Principal and interest					$
Purchase of new equipment					$
Taxes due					$
Total cash disbursements					$

(Round to the nearest dollar. Please input all the values in the table before checking your answers.)

	May		June		July
Net cash flow					$
Add: Beginning cash					$
Ending cash					$
Minimum cash					$
Required total financing (notes payable)					$
Excess cash balance (marketable securities)					$

The firm should establish a credit line of at least

$nothing

,

but may need to secure three to four times this amount based on scenario analysis.