In preparation for the quarterly cash budget, the following revenue and cost information have been compiled.

Prepare and evaluate a cash budget for the month of October based on the information shown below.

 

Month Sales Purchases

August $($actual$)$ $$4,500,000$ $$3,500,000$

September $($actual$)$ $$5,000,000$ $$4,000,000$

October $($forecast$)$ $$2,000,000$ $$1,000,000$

$$ The firm collects $60$ percent of sales for cash and $40$ percent of its sales one month later.

$$ The firm pays cash for $40$ percent of its purchases.

$$ The firm pays for $60$ percent of its purchases the following month.

$$ Salaries and wages amount to $15$ percent of the preceding month$$s sales.

$$ Lease payments of $$750,000$ must be made each month.

$$ Depreciation expense each month of $$50,000.$

$$ The firm has a beginning cash balance in October of $$150,000$ and maintains a minimum cash balance of $$100,000.$