PR 21-4A Cash budget OBJ. 5 The controller of Sonoma Housewares Inc. instructs you to prepare cash bud a monthly get for the next three months. You are presented with the following budget information May June July Sales $86,000 0,000 $95,000 Manufacturing costs 34,000 39,000 44,000 Selling and administrative expenses 15,000 16,000 22,000 Capital expenditures 80,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the re- mainder the following month (second month following sale). Depreciation, insurance and property tax expense represent $3,500 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of May 1 include cash of $33,000, marketable securities of $40,000 and accounts receivable of $90,000 ($72,000 from April sales and $18,000 from March sales). Sales on account for March and April were $60,000 and $72,000, respectively. liabilities as of May 1 include $6,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the pe riod they are incurred. An estimated income tax payment of $14,000 will be made in Sonoma's regular quarterly dividend of $5,000 expected to be declared in June and Management desires to maintain a minimum cash balance of $30,000 paid in July. Instructions