Prepared a cash budget for the Account Manufacturing Company, indicating receipt and disbursement for May, June and July. The firm wishes to maintain all times a minimum cash balance of $20,000. Determine whether or not borrowing of $20,000 in cash.

Actual Sales

January

$50,000

February

$50,000

March

$60,000

April

$60,000

Forecast Sales

May

$70,000

June

$80,000

July

$100,000

August

$100,000

Account Receivable: 50% of total sales are for cash. The remaining 50% will be collected equally during the following two months.

Cost of purchases are 80% of sales. 75% of this cost is paid in the following month.

Selling and Administrative expenses: $10,000 per month plus 10% of sale. All of these expenses are during the month of recurrences.

Interest payments: A semiannual interest payment on $150,000 of bonds outstanding for a year is paid during July and December. An annual $50,000 sinking fund payment is also made in August.

Dividend: A $10,000 dividend payment will be declaring and made in July.

Capital expenditure: $40,000 will be invested in plant & equipment in June.

Taxes: Income tax payment of $1,000 will be made in July.