Question
Prepare a cash budget for the XYZ Manufacturing Company, indicating receipts and disbursements for May, June, and July. The firm wishes to maintain at all
Prepare a cash budget for the XYZ Manufacturing Company, indicating receipts and disbursements for May, June, and July. The firm wishes to maintain at all times a minimum cash balance of $50,000. Determine whether or not borrowing will be necessary during the period, and if it is, when and how much. As of April 30, the firm had a balance of $50,000 in cash.
Actual Sales |
| Forecasted Sales | ||
January | $120,000 |
| May | $80,000 |
February | 110,000 |
| June | 95,000 |
March | 100,000 |
| July | 105,000 |
April | 90,000 |
| August | 115,000 |
Accounts receivable: 20% of total sales are for cash. The remaining 80% will be collected 60% during the following months, 30% one more month later, and 10% two more months later (the firm incurs a negligible bad-debt loss.)
Cost of goods manufactured: 65% of sales: 80% of this cost is paid the following month and the remaining 20% one more month later.
Selling, general, and administrative expenses: $15,000 per month plus 5% of sales. All of these expenses are paid during the month of incurrence.
Interest payment: A semiannual interest payment on $1,500,000 of bonds outstanding (10% coupon) is paid during July. An annual $80,000 sinking-fund payment is also made at that time.
Dividends: A $20,000 dividend payment will be declared and made in August.
Capital expenditures: $60,000 will be invested in plant and equipment in June.
Taxes: Income tax payments of $25,000 will be made in July.
What is the total payment for the cost of goods manufactured for the month of June?
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