Question

Grenoble Enterprises had sales of $50,200 in March and $60,200 in April. Forecast sales for May, June, and July are $70,100, $79,600, and $99,800, respectively. The firm has a cash balance of $4,500 on May 1 and wishes to maintain a minimum cash balance of $4,500. Given the following data, prepare and interpret a cash budget for the months of May, June and July.

1) The firm makes 16% of sales for cash, 62% are collected in the next month, and the remaining 22% are collected in the second month following sale.

2) The firm receives other income of $1,900 per month.

3) The firms actual or expctd purchses, all made for cash, are $50,200, $70,200, and $79,900 for the months of May through July, respectively.

4) Rent is $2,900 per month.

5) Wages and salaries are 9% of the previous months sales.

6) Cash dividends of $3,500 will be paid in June.

7) Payment of principal and interest of $4,200 is due in June.

8) A cash purchase of equipment costing $5,900 is scheduled in July.

9) Taxes of $5,900 are due in June.

PART A: Complete the first month of the cash budget for Grenoble Enterprises below: (Round to the nearest dollar.)

PART B: Complete the second month of the cash budget for Grenoble Enterprises below: (Round to the nearest dollar.)

Answer 1