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

May June July

Sales $$143,000$ $$184,000$ $$236,000$

Manufacturing costs $60,00079,00085,000$

Selling and administrative expenses $41,00050,00052,000$

Capital expenditures $\_\_125,000$

The company expects to sell about $15\%$ of its merchandise for cash. Of sales on account, $65\%$ are expected to be collected in the month following the sale and the remainder the following month $($second month following sale$).$ Depreciation, insurance, and property tax expense represent $$6,000$ of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, $85\%$ are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of May $1$ include cash of $$54,000,$ marketable securities of $$77,000,$ and accounts receivable of $$164,900($$$125,000$ from April sales and $$39,900$ from March sales$).$ Sales on account for March and April were $$114,000$ and $$125,000,$ respectively. Current liabilities as of May $1$ include $$14,000$ of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $$22,000$ will be made in June. Sonoma$$s regular quarterly dividend of $$6,000$ is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $$42,000.$

Required:

$1.$ Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign.

Sonoma Housewares Inc.

Cash Budget

For the Three Months Ending July $31$

May June July

Estimated cash receipts from:

Cash sales $ $ $

Collection of accounts receivable

Total cash receipts $ $ $

Estimated cash payments for:

Manufacturing costs $ $ $

Selling and administrative expenses

Capital expenditures

Other purposes:

Income tax

Dividends

Total cash payments $ $ $

Cash increase or $($decrease$)$ $ $ $

Cash balance at beginning of month

Cash balance at end of month $ $ $

Minimum cash balance

Excess $($deficiency$)$ $ $ $

$2.$ The budget indicates that the minimum cash balance

be maintained in July. This situation can be corrected by

and$/$or by the

of the marketable securities$,$ if they are held for such purposes. At the end of May and June, the cash balance will

the minimum desired balance.