Question 2 Doterra Corporation has budgeted sales revenues as follows: Credit Sales Cash Sales Total Sales June $23,000 34,000 $57,000 July $22,000 46,000 $68,000 August $25,000 53,000 $78,000 Past experience indicates that 70% of the credit sales will be collected in the month of sale and the remaining 30% will be collected in the following month. Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are: June July August $43,000 48,000 52,000 Other cash disbursements budgeted: (a) selling and administrative expenses of $10,000 each month, (b) dividends of $20,000 will be paid in July, and (c) purchase of computers in August for $4,800 cash. The company wishes to maintain a minimum cash balance of $10,000 at the end of each month. The company borrows money from the bank at 9% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. Money is borrowed and repaid in increments of $1,000. The beginning cash balance on July 1 was $10,000. Interest on the borrowed money is paid monthly. Required: Prepare a cash budget for the months of July and August. (Preparing a separate schedule for expected collections from customers and expected payments for purchases of inventory might be a good start) Use this space for calculations but complete the provided template in the quiz tool on Learning Hub. Calculations will not be considered if you do not complete the quiz. Mark: 2/5 Chapter 14 Schedule of Expected Collections from Customers Credit Sales: July August June July August Total collections Schedule of Expected Payments for Purchase of Inventory July August Inventory Purchases: June July August Total payments Cash Budget (Complete this template in the quiz tool) July August Beginning cash balance Add: Receipts Collections from customers Cash sales Total receipts Total available cash Less: Disbursements Purchases Selling and administrative expenses Dividends Computers purchase Total disbursements Excess (deficiency) of available cash over disbursements Financing: Borrowings Repayments Ending cash balance