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Cruises, Inc. has budgeted sales revenues as follows: June July August Credit Sales $135,000 $135,000 $90,000 Cash Sales 90,000 225,000 195,000 Total Sales $225,00 $380,000
| Cruises, Inc. has budgeted sales revenues as follows: | |||
| June | July | August | |
| Credit Sales | $135,000 | $135,000 | $90,000 |
| Cash Sales | 90,000 | 225,000 | 195,000 |
| Total Sales | $225,00 | $380,000 | $285,000 |
| Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Cash disbursements were $421,000 for July and $250,500 for August. The company wishes to maintain a minimum cash balance of $50,000 at the end of each month. To maintain the minimum cash balance, if necessary, the company borrows money from the bank at a 6% annual interest rate. Any outstanding loans are repaid in the months when there is an excess cash balance. The beginning cash balance on July 1 was $50,000. Prepare a cash budget for the months of July and August. Prepare a seperate schedule for expected collections from the customers. | |||
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