October July $22,000 (11,000) 11,000 $40.000 (21,000 19,000 5,200 4,600 (9,800 $ 9,200 Cash budgeting for Nichole Mango, a merchandising firm, is performed on a quarterly basis. The com to assist in preparing a cash budget. Budgeted income statements for July through October 2017 pany is planning its cash needs for the third quarter of 2017, and the following information is available 8. The company can borrow from its bank as needed. Borrowings and repayments must be in multiples of $100. All borrowings take place at the beginning of a month, and all repayments are made at the end of a month. When the principal is repaid, interest on the repayment is also paid. The interest rate P9-36. Cash Budget as follows: August September $28,000 $32,000 Sales. (15,000) (17,000) Cost of goods sold. 13,000 15,000 Gross profit. ... Less other expenses 3,300 4,000 4,400 Selling .... 3,600 5,000 4,200 Administrative. (6,900) (9,000) (8,600) Total $ 4,100 $ 4,000 $ 6,400 Net income. Additional information follows: 1. Other expenses, which are paid monthly, include $2,000 of depreciation per month. 2. Sales are 40 percent for cash and 60 percent on credit. 3. Credit sales are collected 25 percent in the month of sale, 65 percent one month after sale, and 10 percent two months after sale. May sales were $16,000, and June sales were $17,000. 4. Merchandise is paid for 50 percent in the month of purchase; the remaining 50 percent is paid in the following month. Accounts payable for merchandise at June 30 totaled $7,000. 5. The company maintains its ending inventory levels at 20 percent of the cost of goods to be sold in the following month. The inventory at June 30 is $2,200. 6. An equipment note of $6,000 per month is being paid through August. 1. The company must maintain a cash balance of at least $6,000 at the end of each month. The cash balance on June 30 is $6,100. is 12 percent per year. Chapter 9 Operational Budgeting and Profit Planning 341 Required Prepare a monthly schedule of budgeted operating cash receipts for July, August, and September 6. Prepare a monthly purchases budget and a schedule of budgeted cash payments for purchases for Prepare a monthly cash budget for July August, and September. Show borrowings from the com- pany's bank and repayments to the bank as needed to maintain the minimum cash balance. Cash Budget LO3 37. alliams Supply Company sells for $40 one product that it purchases for $25 Budgeter sales in total