Exercise 07-31A Merchandising: Cash budget LO P4 Castor, Inc., is preparing its master budget for the quarter ended June 30. Budgeted sales and cash payments for merchandise for the next three months follow: Budgeted Sales Cash payments for merchandise April $31,300 21,600 May $40,700 16,100 June $ 24,700 16,500 Sales are 65% cash and 35% on credit. All credit sales are collected in the month following the sale. The March 31 balance sheet includes balances of $12,700 in cash, $12,700 in accounts receivable, $11,700 in accounts payable, and a $2,700 balance in loans payable. A minimum cash balance of $12,700 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 2% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and include sales commissions (5% of sales), shipping (2% of sales), office salaries ($5,700 per month), and rent ($3,700 per month). Prepare a cash budget for each of the months of April, May, and June. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) Answer is complete but not entirely correct. CASTOR, INC. Cash Budget For April, May, and June April May June $ 12,700 $ Beginning cash balance Cash sales 20,345 12,700 $ 26,455 20,345 X 28,193 X 16,055 26,455 X 70,703 Collections on account 12,700 45,745 59,500 Total cash available Cash payments for: Merchandise 16,100 16,500 21,600 1,565 2,035 1,235 Sales commissions Shipping Office salaries 626 814 494 5,700 5,700 5,700 Rent 3,700 3,700 3,700 Interest on bank loan 54 58 0 Total cash payments 33,245 28,407 27,629 12,500 43,074 X Preliminary cash balance Additional loan (loan repayment) Ending cash balance 200 31,093 X (2,900) 28,193 X 0 12,700 43,074 X Loan balance April May June $ 2,700 $ 2,900 $ 0 Loan balance - Beginning of month Additional loan (loan repayment) 200 (2,900) Loan balance - End of month $ 2,900 $ 0 $ 0