Ellis Electronics Company's actual sales and purchases for April and May are shown here, along with forecasted sales and purchases for June through September.

SalesPurchasesApril (actual)$440,000$142,000May (actual)420,000132,000June (forecast)395,000132,000July (forecast)395,000192,000August (forecast)410,000212,000September (forecast)450,000182,000

The company makes 10 percent of its sales for cash and 90 percent on credit. Of the credit sales, 20 percent are collected in the month after the sale and 80 percent are collected two months after. Ellis pays for 40 percent of its purchases in the month after purchase and 60 percent two months after.

Labour expense equals 25 percent of the current month's sales. Overhead expense equals $13,200 per month. Interest payments of $36,000 are due in June and September. A cash dividend of $56,000 is scheduled to be paid in June. Tax payments of $26,200 are due in June and September. There is a scheduled capital outlay of $420,000 in September.

Ellis Electronics' ending cash balance in May is $26,000. The minimum desired cash balance is $21,000.

a.Prepare schedule ofmonthly cash receipts for June through September.

Ellis Electronics

Cash Receipts ScheduleAprilMayJuneJulyAugustSeptemberSales$$$$$$Credit salesCash salesCollections in month after saleCollections second month after saleTotal cash receipts

b.Prepare the monthly cash payments for June through September.

Ellis Electronics

Cash Payments Schedule

AprilMayJuneJulyAugustSeptemberPurchases$$$$$$Payments in the month after purchasePayments second month after purchaseLabour expenseOverheadInterest paymentsCash dividendTaxesCapital outlayTotal cash receipts$$$$

c.Prepare complete monthly cash budget with borrowing and repayments for June through September. The maximum desired cash balance is $51,200. Excess cash (above $51,200) is used to buy marketable securities. Marketable securities are sold before borrowing funds in case of a cash shortfall (less than $21,000).(Do not leave any empty spaces; input a 0 wherever it is required. Negative answers and amounts to be deducted should be indicated by a minus sign.)

Ellis Electronics

Cash Budget

JuneJulyAugustSeptemberCash receipts$$$$Cash paymentsNet cash flowBeginning cash balanceCumulative cash balanceMonthly borrowing or (repayment)Cumulative loan balanceMarketable securities purchasedMarketable securities soldCumulative marketable securitiesEnding cash balance$$$$

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