Problem #4 (15 Points)

Mancini, Inc. a retailer of specialty wall papers prepares a monthly master budget. Data for the September master budget are given below:

a.	Actual sales for August and budgeted sales for September are given below:
		August	$120,000
		September	360,000

b.

Sales are 75% cash and collected immediately at time of sale. The remainder represents credit sales. From the credit sales, 40% is collected in the month of sale, and 60% is collected in the month following the sale.

c.

60% of purchases are paid for in the month or purchase, and the remaining 40% is paid in the month following the purchase.

	Actual purchases for August and budgeted sales for September are given below:
		August	$105,000
		September	80,000

d.

The monthly cash operating expenses are $80,000 including the monthly depreciation of $7,000

e.

During September, Mancini Company will purchase new office equipment for $17,000 cash.

f.

The company must maintain a minimum cash balance of $25,000. A line of credit is used to maintain this balance. Borrowing will be made in increments of $1,000. The annual interest rate is 12%

g. The ending cash balance for August was $5,000.

Required:

Prepare a cash budget for the month of September only.