The ownerofasmallmining supply company hasrequested a cashbudgetforJune. Afterexamining the records of the company, you find thefollowing:

1. Cashbalance onJune1is$345.
2. ActualsalesforAprilandMayare

Cashsales	April $10,000	May $15,000
Creditsales	25,000	25,000
Total sales	$35,000	$40,000

1. Creditsales are collected overathree-monthperiod: 50percent inthemonthof sale, 30 percent in the second month, and 15percent in the third month. The

sales collected in the third month are subject toa 1.5percent late fee,but only half oftheaffectedcustomerspay thelatefee, and theownerdoesnotthink it is worthhis while totry tocollect fromthe other half.The remainingsales are uncollectible.

1. Inventorypurchases average 60percent of amonth'stotalsales. Ofthosepurchases, 40 percent are paid forin the month ofpurchase. The remaining60percent

arepaidforinthefollowing month.

1. Salariesandwagestotal$8,700amonth,including a$4,500salary paid tothe owner.
2. Rentis$1,200permonth.
3. TaxestobepaidinJuneare$5,500.

Theowneralsotellsyouthatheexpects cashsalesof$20,000andcreditsalesof

$30,000forJune.There is nominimum cash balance required. The ownerofthe company doesnot have access toshort-term loans.

Do:

1. Prepare acashbudgetforJune.Includesupporting schedulesforcash collections and cash payments.
2. Didthebusinessshow a negativecashbalance forJune?Assuming thatthe

ownerhasnohopeof establishing aline of creditforthebusiness,whatrecommendations would you give theowner for dealing witha negative cash balance?