During the last week of August, Oneida Companys owner approaches the bank for an $100,000 loan to be made on September 2 and repaid on November 30 with annual interest of 12%, for an interest cost of $3,000. The owner plans to increase the stores inventory by $80,000 during September and needs the loan to pay for inventory acquisitions. The banks loan officer needs more information about Oneidas ability to repay the loan and asks the owner to forecast the stores November 30 cash position. On September 1, Oneida is expected to have a $5,000 cash balance, $148,000 of accounts receivable, and $125,000 of accounts payable. Its budgeted sales, merchandise purchases, and various cash disbursements for the next three months follow.

*Operations began in August; August sales were $215,000 and purchases were $125,000.

The budgeted September merchandise purchases include the inventory increase. All sales are on account. The company predicts that 25% of credit sales is collected in the month of the sale, 45% in the month following the sale, 20% in the second month, 9% in the third, and the remainder is uncollectible. Applying these percents to the August credit sales, for example, shows that $96,750 of the $215,000 will be collected in September, $43,000 in October, and $19,350 in November. All merchandise is purchased on credit; 80% of the balance is paid in the month following a purchase, and the remaining 20% is paid in the second month. For example, of the $125,000 August purchases, $100,000 will be paid in September and $25,000 in October.

Required:

Prepare a cash budget for September, October and November for Oneida Company. Show supporting calculations as needed.

Budgeted Figures" Sales Merchandise purchases Cash disbursements September October November $250,000 375,000 $400,000 200,000 240,000 225,000 Payroll Rent Other cash expenses Repayment of bank loan Interest on the bank loan 20,000 10,000 35,000 22,000 10,000 30,000 24,000 10,000 20,000 100,000 3,000