Company wants to keep a monthly cash balance of 50,000

Cash balance May 1: 52,000

They have a line of credit at a local bank that enables it to borrow up to 40,000 per month with 12% interest per year.

Anything borrowed is repaid the following months because cash is available.

Sales: May 160,000 June 240,000 (At point of sale, 70% is received in cash and the balance is collected in the following month).

DM purchases: May 83,000 June 103,000 (The following month).

DL: May 50,000 June 60,000 (Wages are paid at the time they are incurred).

FO: May 25,000 June 20,000 (All cash overhead costs are paid as incurred).

Selling and Admin Expenses: May 24,000 June 21,000 (All cash selling and admin costs are paid when incurred.

Equipment Purchase: June 20,000

Use the above information to prepare the following:

*Note: Prepare cash budget for months of May and June.

Schedule of Expected Cash Collections from Customers June July May sales 60,000 June sales July sales $ $ Schedule of Expected Payments for Direct Materials June July May purchases 30,000 June purchases July purchases $ $ $ July 52,000 $ 52,000 Cash Budget For June & July June Beginning cash balance 52,000 $ Cash receipts $ Total cash available $ 52,000 $ Cash payments DM purchased $ $ DL FO S&A expenses Equipment Interest expense Total cash payments $ Preliminary cash balance $ 52,000 $ Additional loan from bank Repayment of loan to bank Ending cash balance 52,000 $ Ending loan balance $ $ 52,000 $ 52,000 $