Jim Corp. has requested a cash budget for July and August. The following information has been gathered:

a. Cash balance as of July 1:$35,000.

b. Actual and forecasted sales are as follows:

May June July August

Cash sales...................... $25,000 $30,000 $40,000 $50,000

Credit sales.................... 60,000 80,000 100,000 110,000

Total............................. $85,000 $110,000 $140,000 $160,000

c. Credit sales are collected 40% in the month of the sale, 35% in the month following the sale, and 25% in the second month following the sale.

d. Inventory purchases average 55% of sales. Of these purchases, 65% are paid for in the month of the purchase, with the remainder paid in the following month.

e. Operating expenses are paid in the month incurred. Expenses include $2,500 in rent, 6,000 in salaries, and $750 in utilities and miscellaneous expenses.

Required:

1. Prepare a cash budget for July and August