During the last week of August, Oneida Company's owner approaches the bank for a $108,500 loan to be made on September 2 and repaid on November 30 with annual interest of 13%, for an interest cost of $3,526. The owner plans to increase the store's inventory by $60,000 during September and needs the loan to pay for inventory acquisitions. The bank's loan officer needs more information about Oneida's ability to repay the loan and asks the owner to forecast the store's November 30 cash position. On September 1, Oneida is expected to have a $4,500 cash balance, $115,500 of net accounts receivable, and $100,000 of accounts payable. Its budgeted sales, merchandise purchases, and various cash payments for the next three months follow. September $ 230,000 225,000 October $ 425,000 220,000 November $ 440,000 201,000 Budgeted Figures Sales Merchandise purchases Cash payments Payroll Rent Other cash expenses Repayment of bank loan Interest on the bank loan 20,300 11,000 34,500 22,000 11,000 30,400 24,500 11,000 21,300 108,500 3,526 *Operations began in August, August sales were $150,000 and purchases were $120,000. The budgeted September merchandise purchases include the inventory increase. All sales are on account. The company predicts that 23% of credit sales is collected in the month of the sale, 47% in the month following the sale, 19% in the second month, 7% in the third, and the remainder is uncollectible. Applying these percents to the August credit sales, for example, shows that $70,500 of the $150,000 will be collected in September, $28,500 in October, and $10,500 in November. All merchandise is purchased on credit: 90% of the balance is paid in the month following a purchase, and the remaining 10% is paid in the second month. For example, of the $120,000 August purchases, $108,000 will be paid in September and $12,000 in October. Required: Prepare a cash budget for September, October, and November. Calculation Cash Budget Prepare the calculation of cash receipts from sales and calculation of cash payments for merchandise. Calculation of cash receipts from sales --Collected in Total Sales Uncollectible August September October November 30. November Accounts Rec. 0 Credit sales from: August September October November Totals $ 150,000 230,000 425,000 440,000 $ 1,245,000 0 0 0 0 Calculation of cash payments for merchandise --Paid in--- November 30. Total Purchases August September October November Accounts Pay. $ 0 Purchases from: August September October November Totals $ 120,000 225,000 220,000 201,000 $ 766,000 0 ONEIDA COMPANY Cash Budget For September, October, and November September October Beginning cash balance $ 4,500 Cash receipts November Total cash available Cash payments: 0 0 0 Total cash payments Ending cash balance