Cruises, Inc. has budgeted sales revenues as follows:

	June	July	August	September
Credit sales ($)	135,000	125,000	$ 90,000	120,000
Cash sales ($)	90,000	255,000	195,000	175,000
Total sales ($)	225,000	380,000	285,000	295,000
Purchases ($)	300,000	240,000	205,000	185,000

Past experience indicates that 60% of the credit sales will be collected in the month of sale and 20% will be collected in the following month and the remaining 20% after two months. Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Other cash disbursements budgeted: (a) selling and administrative expenses of $48,000 each month, (b) dividends of $103,000 will be paid in July, and (c) purchase of equipment in August for $30,000 cash and (d) sale of old furniture for $ 2,000 in September.

The company wishes to maintain a minimum cash balance of $50,000 at the end of each month. The company borrows money from the bank at 6% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50,000. Assume that borrowed money, in this case, is for one month.

Instructions

Prepare a cash budget for the months of July, August, and September. Prepare separate schedules for expected collections from customers and expected payments for purchases of inventory.

Please follow the format on the next page for answering this question

CRUISES, INC.

Cash Budget

For the Months of July, August, and September

July August September

Beginning cash balance

Add: Receipts

Collections from customers

Cash sales

Total receipts

Total available cash

Less: Disbursements

Purchases

Selling and administrative expenses

Dividends

Equipment purchase

Total disbursements

Excess (deficiency) of available cash over disbursements

Financing

Borrowings

Repayments

Ending cash balance