P$22-36.$ Cash Budget

Assume all Office Depot stores do cash budgeting every quarter. One store is planning its cash needs for the third quarter of the year, and the following information is available to assist in preparing a cash budget. Budgeted income statements for July through October are as follows:

Additional information follows:

$1.$ Other expenses, which are paid monthly, include $$3,500$ of depreciation per month.

$2.$ Sales are $44\%$ for cash and $56\%$ on credit.

$3.$ Credit sales are collected $50\%$ in the month of sale, $35\%$ one month after sale, and $15\%$ two months after sale. May sales were $$40,000,$ and June sales were $$42,000.$

$4.$ Merchandise is paid for $50\%$ in the month of purchase; the remaining $50\%$ is paid in the following month. Accounts payable for merchandise at June $30$ totaled $$12,000.$

$5.$ The store maintains its ending inventory levels at $30\%$ of the cost of goods to be sold in the following month. The inventory at June $30$ is $$7,600.$

$6.$ An equipment note of $$10,000$ per month is being paid through August.

$7.$ The store must maintain a cash balance of at least $$10,000$ at the end of each month. The cash balance on June $30$ is $$10,000.$

$8.$ The store 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 is $6\%$ per year.

REQUIRED

a$.$ Prepare a monthly schedule of budgeted operating cash receipts for July, August, and September.

b$.$ Prepare a monthly purchases budget and a schedule of budgeted cash payments for purchases for July, August, and September.

c$.$ Prepare a monthly cash budget for July, August, and September. Show borrowings from the store's bank and repayments to the bank as needed to maintain the minimum cash balance.