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In: Finance

Grenoble Enterprises had sales of $ 50 comma 500$50,500 in March and $ 59 comma 500$59,500...

Grenoble Enterprises had sales of

$ 50 comma 500$50,500

in March and

$ 59 comma 500$59,500

in April. Forecast sales for​ May, June, and July are

$ 69 comma 500$69,500​,

$ 79 comma 600$79,600​,

and

$ 100 comma 100$100,100​,

respectively. The firm has a cash balance of

$ 4 comma 900$4,900

on May 1 and wishes to maintain a minimum cash balance of

$ 4 comma 900$4,900.

Given the following​ data, prepare and interpret a cash budget for the months of​ May, June, and July.

​(1) The firm makes

18 %18%

of sales for​ cash,

60 %60%

are collected in the next​ month, and the remaining

22 %22%

are collected in the second month following sale.  

​(2) The firm receives other income of

$ 2 comma 000$2,000

per month.  

​(3) The​ firm's actual or expected​ purchases, all made for​ cash, are

$ 49 comma 600$49,600​,

$ 69 comma 600$69,600​,

and

$ 80 comma 100$80,100

for the months of May through​ July, respectively.  

​(4) Rent is

$ 2 comma 500$2,500

per month.  

​(5) Wages and salaries are

8 %8%

of the previous​ month's sales.  

​(6) Cash dividends of

$ 2 comma 600$2,600

will be paid in June.  

​(7) Payment of principal and interest of

$ 4 comma 500$4,500

is due in June.  

​(8) A cash purchase of equipment costing

$ 6 comma 400$6,400

is scheduled in July.  

​(9) Taxes of

$ 6 comma 200$6,200

are due in June.

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