The following information is available to assist you in preparing a company's cash budget.

1. The cash balance on July 1 is $58,600.
2. Actual sales for May and June and expected sales for July are as follows:

MayJuneJulyCash sales$73,200$78,000$92,000Sales on account$485,000$568,000$663,000

Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.

1. Purchases of inventory will total $316,000 for July. Thirty percent of a month's inventory purchases are paid during the month of purchase. The accounts payable remaining from June's inventory purchases total $162,000, all of which will be paid in July.
2. Selling and administrative expenses are budgeted at $514,000 for July. Of this amount, $52,000 is for depreciation.
3. A new web server for the Marketing Department costing $117,500 will be purchased for cash during July, and dividends totaling $12,500 will be paid during the month.
4. The company maintains a minimum cash balance of $20,000. An open line of credit is available from the company's bank to increase its cash balance as needed.

Required:

1. Calculate the expected cash collections for July.

2. Calculate the expected cash disbursements for merchandise purchases for July.

3. Prepare a cash budget for July. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.