July August September

Budgeted Sales 56,500 72,500 55,500

Direct materials 15,660 12,940 13,260

direct labor 3,540 2,860 2,940

factory overhead 19,700 16,300 16,700

Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $44,500 in accounts receivable; $4,000 in accounts payable; and a $4,500 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% 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 consist of sales commissions (10% of sales), office salaries ($3,500 per month), and rent ($6,000 per month).

Required information For July, August, and September August September Beginning cash balance 15,000 S 55,800 70,800 15,000 S 59,700 74,700 25,504 69,100 94,604 ash receipts from customers Total cash available Cash payments for Direct materials Direct labor Overhead Sales commissions Office salaries Rent Interest on bank loan 15,660 3,540 19,700 5,650 3,500 6,000 45 54,095 15 12,940 2,860 16,300 7,250 3,500 6,000 40 48,890 13,260 2,940 16,700 5,550 3,500 6,000 Total cash payments Preliminary cash balance Additional loan (loan repayment) Ending cash balance 47,950 15 Loan balance August September Loan balance Beginning of month Additional loan (loan repayment) Loan balance End of month