In: Accounting
Cash
budgetlong dash—Basic
Grenoble Enterprises had sales of $50,100 in March and $59,600 in April. Forecast sales for May, June, and July are
$69,700, $80,100,and $99,500, respectively. The firm has a cash balance of $5,200
on May 1 and wishes to maintain a minimum cash balance of $5,200.
Given the following data, prepare and interpret a cash budget for the months of May, June, and July.
(1) The firm makes
20 % of 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 $2,100 per month.
(3) The firm's actual or expected purchases, all made for cash, are $50,200, $70,300,
and $80,500 for the months of May through July, respectively.
(4) Rent is $3,200 per month.
(5) Wages and salaries are
11 % of the previous month's sales.
(6) Cash dividends of $2,600 will be paid in June.
(7) Payment of principal and interest of$3,80 is due in June.
(8) A cash purchase of equipment costing $5,900 is scheduled in July.
(9) Taxes of $6,500 are due in June.
Complete the first month of the cash budget for Grenoble Enterprises below: (Round to the nearest dollar. Please input all the values in the table before checking your answers.)
March April May june July
Sales
Cash Sales
Lag 1 month
Lag 2 month
Other income
Total Cash receipts
Disbursements
Purchases
rent
wages and salaries
dividends
principal and interest
purchase of new equipment
taxes due
total cash disbursements
Net cash flow
Add: beginning cash
ending cash
minimum cash
required total financing ( notes payable )
Excess cash balance (marketable securities)
Particulars | March | April | May | June | July |
Sales | $50,100 | $59,600 | $69,700 | $80,100 | $99,500 |
Cash Sales | $10,020 | $11,920 | $13,940 | $16,020 | $19,900 |
Lag 1 month | $35,760 | $41,820 | $48,060 | ||
Lag 2 month | $11,920 | $13,940 | $16,020 | ||
Other income | $2,100 | $2,100 | $2,100 | ||
Total Cash receipts | $63,720 | $73,880 | $86,080 | ||
Disbursements: | |||||
Purchases | $50,200 | $70,300 | $80,500 | ||
Rent | $3,200 | $3,200 | $3,200 | ||
Wages & Salaries | $6,556 | $7,667 | $8,811 | ||
Dividends | $0 | $2,600 | $0 | ||
Principal and Interest | $0 | $3,800 | $0 | ||
Purchase of New Equipment | $0 | $0 | $5,900 | ||
Taxes Due | $0 | $6,500 | $0 | ||
Total Cash Disbursements | $59,956 | $94,067 | $98,411 | ||
Net Cash Flow | $3,764 | -$20,187 | -$12,331 | ||
Add: beginning cash | $5,200 | $5,200 | $5,200 | ||
ending cash | $8,964 | -$14,987 | -$7,131 | ||
minimum cash | $5,200 | $5,200 | $5,200 | ||
Required total financing (notes payable) | $0 | $9,787 | $1,931 | ||
Excess cash balance (marketable securities) | $3,764 | $0 | $0 |