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Natural Beauty, Inc., a distributor of natural cosmetics, is ready to begin its third quarter, in which peak sales occur. The company has requested a $70,000, 90-day loan from its bank to help meet cash requirements during the quarter. Because Natural Beauty has experienced difficulty in paying off its loans in the past, the bank?s loan officer has asked the company to prepare a cash budget for the quarter. In response to this request, the following data have been assembled:

a.	On July 1, the beginning of the third quarter, the company will have a cash balance of $29,000.

b.	Actual sales for the last two months and budgeted sales for the third quarter follow (all sales are on account):

May (actual)	$	280,000
June (actual)	$	240,000
July (budgeted)	$	290,000
August (budgeted)	$	360,000
September (budgeted)	$	330,000

Past experience shows that 25% of a month's sales are collected in the month of sale, 70% in the month following sale, and 2% in the second month following sale. The remainder is uncollectible.

c.	Budgeted merchandise purchases and budgeted expenses for the third quarter are given below:

	July	August	September
Merchandise purchases	$	174,000		$	180,000		$	198,000
Salaries and wages	$	48,000		$	48,000		$	26,000
Advertising	$	58,000		$	68,000		$	69,000
Rent payments	$	24,000		$	24,000		$	24,000
Depreciation	$	34,000		$	34,000		$	34,000

	Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases on June 30, which will be paid during July, total $144,000.
d.	Equipment costing $15,000 will be purchased for cash during July.
e.	In preparing the cash budget, assume that the $70,000 loan will be made in July and repaid in September. Interest on the loan will total $1,800.

Cash collection from sales: May sales(280,000@2%) June sales( 240,000 @70%, 2%) July sales (290,000@25%,70%,2 % August sales(360,000@25%, 70% September sales 330,000@25% total July 5,600 August - September - Quarter 5,600 168,000 4,800 72,500 203,000 5,800 281,300 - 90,000 252,000 342,000 - - 82,500 82,500 $246,100 297,800 340,300 884,200 172,800 Cash budget Cash bal Collection Total cash collection Less: disbursements Merchandise purchases Salaries & wages Advertising Rent payments Equipment Total disbursement Excess(deficieny) financing Borrowings Repayments interest July $29,000 246,100 275,100 August $56,100 297,800 353,900 September $39,900 340,300 380,200 Quarter $29,000 884,200 913,200 144,000 174,000 180,000 498,000 48,000 58,000 24,000 15,000 289,000 48,000 68,000 24,000 26,000 69,000 24,000 314,000 299,000 122,000 195,000 72,000 15,000 902,000 (13,900) 39,900 81,200 11,200 (70,000) (1,800) 70,000 (70,000) (1800) 70,000 Total financing Cash bal ending 70,000 56,100 39,900 (71,800) 9,400 (1800) 9400