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July August September Raw materials used $40,000 $36,000 $44,000 Salaries 70,000 98,000 92,000 Maintenance and repairs 18,000 18,000 18,000 Depreciation 36,000 36,000 36,000 Utilities and

July August September
Raw materials used $40,000 $36,000 $44,000
Salaries 70,000 98,000 92,000
Maintenance and repairs 18,000 18,000 18,000
Depreciation 36,000 36,000 36,000
Utilities and other 14,000 14,000 15,000
Dividends paid -0- 10,000 -0-
Payment on bonds 8,000 8,000 8,000

Sales for July, August, and September are expected to be $200,000, $180,000, and $220,000, respectively, for Pasta Company. All sales are on account (terms 2/15, net 30 days) and are collected 50 percent in the month of the sale and 50 percent in the following month. One-half of all sales discounts are taken on the average. Raw materials are purchased one month before being needed, and all purchases and expenses are paid for as incurred. Activities for the quarter are provided on the left.

Required: Using the given information, prepare the cash budget for August if the cash balance on August 1 is $12,000 and minimum cash balance for each month should be $10,000. Assume that cash can be borrowed in $1,000 increments from the local bank with no interest charges.

Cash Budget for August
Beginning cash balance
Cash receipts from sales:
July sales collected in August (200000 *.50)
August sales collected in August (180000 * .50)
Total cash receipts
Cash disbursements:
Raw materials
Salaries
Maintenance and repairs
Utilities and other
Dividends paid
Payment on bonds
Total disbursements
Expected ending balance
Borrowings in August
Ending cash balance

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