Exercise 9-45 CASH BUDGET OBJECTIVE 3 The owner of a small mining supply company has requested a cash budget for June. After examining the records of the company, you find the following: a. Cash balance on June 1 is $830 b. Actual sales for April and May are as follows: Cash sales Credit sales Total sales April $10,000 25,000 $35,000 $15,000 35,000 $50,000 Credit sales are collected over a three-month period: 50 percent in the month of sale, 30 percent in the second month, and 15 percent in the third month. The sales collected in the third month are subject to a 1 percent late fee, which is paid by those c. customers in addition to what they owe. The remaining sales are uncollectible. d. Inventory purchases average 75 percent of a month's total sales. Of those purchases, 20 percent are paid for in the month of purchase. The remaining 80 percent are paid for in the following month. c. f Rent is $1,340 per month. g. Taxes to be paid in June are $5,500. Salaries and wages total $8,700 per month, including a $4,500 salary paid to the owner The owner also tells you that he expects cash sales of $15,000 and credit sales of $50,000 for June. No minimum cash balance is required. The owner of the company does not have access to short-term loans. Required: 1. Prepare a cash budget for June. Include supporting schedules for cash collections and cash payments Did the business show a negative cash balance for June? Assuming that the owner 2. has no hope of establishing a line of credit for the business, what recommendations would you give the owner for dealing with a negative cash balance