The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

	June		July		August
Sales	$160,000		$185,000		$200,000
Manufacturing costs	66,000		82,000		105,000
Selling and administrative expenses	40,000		46,000		51,000
Capital expenditures	_		_		120,000

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month following the sale and the remainder the following month (second month after sale). Depreciation, insurance, and property tax expense represent $12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in February, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of June 1 include cash of $42,000, marketable securities of $25,000, and accounts receivable of $198,000 ($150,000 from May sales and $48,000 from April sales). Sales on account in April and May were $120,000 and $150,000, respectively. Current liabilities as of June 1 include $13,000 of accounts payable incurred in May for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $24,000 will be made in July. Mercury Shoes' regular quarterly dividend of $15,000 is expected to be declared in July and paid in August. Management wants to maintain a minimum cash balance of $40,000.

Required:

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1. Prepare a monthly cash budget and supporting schedules for June, July, and August. Enter all amounts as positive numbers except for Cash (decrease) and (deficiency). Use the minus sign to indicate an overall cash decrease and deficiency.

Mercury Shoes Inc. Cash Budget For the Three Months Ending August 31

	June	July	August
Estimated cash receipts from:
Cash sales	$fill in the blank	$fill in the blank	$fill in the blank
Collection of accounts receivable	fill in the blank	fill in the blank	fill in the blank
Total cash receipts	$fill in the blank	$fill in the blank	$fill in the blank
Estimated cash payments for:
Manufacturing costs	$fill in the blank	$fill in the blank	$fill in the blank
Selling and administrative expenses	fill in the blank	fill in the blank	fill in the blank
Capital expenditures			fill in the blank
Other purposes:
Income tax		fill in the blank
Dividends			fill in the blank
Total cash payments	$fill in the blank	$fill in the blank	$fill in the blank
Cash increase or (decrease)	$fill in the blank	$fill in the blank	$fill in the blank
Cash balance at beginning of month	fill in the blank	fill in the blank	fill in the blank
Cash balance at end of month	$fill in the blank	$fill in the blank	$fill in the blank
Minimum cash balance	fill in the blank	fill in the blank	fill in the blank
Excess or (deficiency)	$fill in the blank	$fill in the blank	$fill in the blank

FILL IN THE BLANK

2. The budget indicates that the minimum cash balance "will or will not" be maintained in August. This situation can be corrected by "investing or borrowing" and/or by the "purchase or sale" of the marketable securities, if they are held for such purposes. At the end of June and July the cash balance will "exceed or be short of" the minimum desired balance.