Kelloggs total sales for each month were first calculated in the sales budget and are reflected on the first line of the cash budget.
	Kelloggs sales are made on credit with terms of 2/10, net 30. Kelloggs experience is that 15% is collected from customers who take advantage of the discount, 75% is collected in the second month, and the last 10% is collected in the third month after the sale. The budget assumes that there are no bad debts.
	The cost of materials averages 45% of Kelloggs finished product. The purchases are generally made one month in advance of the sale, and Kellogg pays its suppliers in 30 days. Accordingly, if July sales are forecasted at $110.00 million, then purchases during June would be $49.50 ($110.00 million x 45%), and this amount would be paid in July.
	Other cash expenses include wages and salaries at 20% of monthly sales, monthly rent of $40.00 million, and other expenses equal to 5% of monthly sales. Estimated tax payments of $195.00 million and $206.00 million are required to be paid on July 15 and October 15, respectively. In addition, a $1,000.00 million payment for a new plant must be made in September.
	Assume that Kelloggs targeted cash balance is $166.72 million, and the estimated cash on hand on July 1 is $166.72 million.

Kellogg Company
($ millions)
Cash Budget
	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
Credit sales	$95.00	$98.00	$100.00	$101.00	$103.00	$105.00	$108.00	$110.00
Credit purchases		45.00		46.35	47.25	48.60	49.50
			Jul	Aug	Sep	Oct	Nov	Dec
Cash receipts
Collections from this months sales		14.85	15.14	15.43	15.88	16.17
Collections from previous months sales		75.00	75.75	77.25	78.75	81.00
Collections from sales two months previously		9.80	10.00	10.10	10.30	10.50
Total cash receipts			????	$99.65	$100.89	$102.78	$104.93	$107.67
Cash disbursements
Payments for credit purchases	45.00	45.45	46.35	????	48.60	49.50
Wages and salaries			20.00	20.20	20.60	????	21.60	22.00
Rent			40.00	40.00	40.00	????	40.00	40.00
Other expenses			5.00	5.05	5.15	????	5.40	5.50
Taxes			195.00
Payment for plant construction			1,000.00	????
Total cash disbursements	$305.00	$110.70	$1,112.10	????	$115.60	$117.00
Net cash flow
(Receipts disbursements)	$-207.30	$-11.05	$-1,011.21	$-216.72	$-10.67	$-9.33
Beginning cash balance			166.72	-40.58	-51.63	-1,062.84	-1,279.56	-1,290.23
Ending cash balance			-40.58	-51.63	?????	-1,279.56	-1,290.23	-1,299.56
Target (minimum) cash balance	166.72	166.72	????	166.72	166.72	166.72
Surplus (shortfall) cash	$-207.30	$-218.35	????	$-1,446.28	$-1,456.95	$-1,466.28

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