Question 7 Grenoble Enterprises had sales of $50,000 in March and $60,000 in April. Forecast sales for May, June, and July are $70,000 $80,000, and $100,000 respectively. The firm has a cash balance of $5,000 on May 1 and wishes to maintain a minimum cash balance of $5,000. Given the following data, prepare and interpret a cash budget for May, June and July. 1) The firm makes 20% sales for cash, 60% are collected in the next month and the remaining 20% are collected in the second month following sale. 2) The firm receives other income of $2,000 per month 3) Actual and expected purchases are all made for cash, and they are $50,000 for May, $70,000 for June and $80,000 for July, 4) Rent is $3,000 per month 5) Wages and salaries are 10% of the previous month's sales 6) Cash dividends of $3,000 will be paid in June 7) Payment of principal and interest of $4,000 is due in June 8) A cash purchase of equipment costing $6,000 in scheduled in July 9) Taxes of $6.000 are due in June, Question 8 8 Tropidana expects sales for the year to increase from $3.2 million in 2018 to $3.55 million in 2019. The interest expense is expected to drop to $300,000 and dividends are expected to increase to $280,000. Using the percent of sales method and the income statement below, prepare a 2019 pro forma income statement for Tropidana. Tropidana Income Statement for the year ended December 31, 2018 Sales revenue $ 3,200,000 Less costs of goods sold $ 1,725,000 Gross profits 1,475,000 Less operating expense 380,000 Operating profits 1,095,000 Less interest expense $ Net profits before taxes 735,000 Less taxes (40%) 294,000 Net profits after taxes $ 441,000 Less cash dividends 225,000 Earnings available to common stockholders 216,000 $ $ S 360,000 S S S