Mellon Company's financial managers are meeting with the company's bank to renew their line of credit and discuss their investment needs. They have prepared the company's operating cash budget for the last six months of the year The following budget assumptions were used to construct the budget: Mellon's total sales for each month were first calculated in the sales budget and are reflected on the first line of the cash budget. Mellon's sales are made on credit with terms of 2/10, net 30-Mellon's 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 55% of Mellon's finished product. The purchases are generally made one month in advance of the sale, and Mellon pays its suppliers in 30 days. Accordingly, if July sales are forecasted at $1,210 million, then purchases during June would be $666 ($1,210 million x 0.55), and this amount would be paid in July * Other cash expenses include wages and salaries at 16% of sales, monthly rent of $44 million, and other expenses at 5% of sales. Estimated tax payments of $64 million and $67 million are required to be paid on July 15 and October 15, respectively. In addition, a $1,100 million payment for a new plant must be made in September Assume that Mellon's targeted cash balance is $200, and the estimated cash on hand on July 1 is $192. Use the preceding information to fill in the missing amounts in the following cash budget. Mellon Company Cash Budget For the Six Months Ended December 31, Year 1 ($ millions) June $1,078 August September $1,133 635 October November December $1,045 $1,100 1,111 $1,155 653 Credit sales $1,188 $1,210 Credit purchases August September October November December Cash receipts Collections from this month's sales Collections from previous month's sales Collections from sales two months previously 163 825 108 $1,096 167 833 110 $1,110 170 850 175 866 178 $1,131 $1,154 $1,185 Total cash receipts Cash disbursements Payments for credit purchases Wages and salaries Rent Other expenses Taxes Payment for plant construction 605 176 611 178 653 190 194 64 $889 $2,005 $965 Total cash disbursements Net cash flow (Receipts-disbursements) Beginning cash balance Ending cash balance Target (minimum) cash balance Surplus (shortfall) cash $132 192 $208 -222 -$895 $142 $220 324 531 $222 200 $206 200 $6 $531 200 $124 -$214