Creating a Cash Budget:

Morton Electronics has projected sales of $6000 in September, $10,000 in October, $16,000 in November and $12,000 in December. Of the companys sales, 20% are paid for by cash and 80% are sold on credit.

Experience shows that 40% of accounts receivable are collected in the month after the sale, while the remaining 60% are collected two months after. Determine collections for November and December.

Also assume Morton Electronics cash payments for expenses for November and December are $13,000 and $6,000, respectively. The beginning cash balance in November is $5000, which is the desired minimum balance.

Prepare a cash budget with borrowing needed or repayments for November and December (You will need to prepare a cash receipts schedule first).

Note: Create the cash budget assignment in Excel.