In: Finance
Cash budget—Basic
Grenoble Enterprises had sales of $50,100 in March and $60,100 in April. Forecast sales for May, June, and July are $69,500, $80,000, and $99,800,
respectively. The firm has a cash balance of $4,800 on May 1 and wishes to maintain a minimum cash balance of $4,800. Given the following data, prepare and interpret a cash budget for the months of May, June, and July.
(1) The firm makes 24% of sales for cash, 62% are collected in the next month, and the remaining 14% are collected in the second month following sale.
(2) The firm receives other income of $1,800 per month.
(3) The firm's actual or expected purchases, all made for cash, are $50,500, $70,300, and $80,300 for the months of May through July, respectively.
(4) Rent is $2,800 per month.
(5) Wages and salaries are 9% of the previous month's sales.
(6) Cash dividends of $3,100 will be paid in June.
(7) Payment of principal and interest of $4,300 is due in June.
(8) A cash purchase of equipment costing $5,900 is scheduled in July.
(9) Taxes of $6,300 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  | 
||||
| 
 Sales  | 
 $  | 
 50,100  | 
 $  | 
 60,100  | 
 $  | 
 69,500  | 
| 
 Cash sales  | 
 12,024  | 
 14,424  | 
 $  | 
|||
| 
 Lag 1 month  | 
 $  | 
|||||
| 
 Lag 2 months  | 
 $  | 
|||||
| 
 Other income  | 
 $  | 
|||||
| 
 Total cash receipts  | 
 $  | 
|||||
(Round to the nearest dollar. Please input all the values in the table before checking your answers.)
| 
 March  | 
 April  | 
 May  | 
||||
| 
 Disbursements  | 
||||||
| 
 Purchases  | 
 $  | 
 ()  | 
||||
| 
 Rent  | 
 $  | 
 ()  | 
||||
| 
 Wages and salaries  | 
 $  | 
 ()  | 
||||
| 
 Dividends  | 
 $  | 
 0  | 
||||
| 
 Principal and interest  | 
 $  | 
 0  | 
||||
| 
 Purchase of new equipment  | 
 $  | 
 0  | 
||||
| 
 Taxes due  | 
 $  | 
 0  | 
||||
| 
 Total cash disbursements  | 
 $  | 
 ()  | 
||||
(Round to the nearest dollar. Please input all the values in the table before checking your answers.)
| 
 March  | 
 April  | 
 May  | 
||||
| 
 Net cash flow  | 
 $  | 
|||||
| 
 Add: Beginning cash  | 
 $  | 
|||||
| 
 Ending cash  | 
 $  | 
|||||
| 
 Minimum cash  | 
 $  | 
|||||
| 
 Required total financing (notes payable)  | 
 $  | 
 0  | 
||||
| 
 Excess cash balance (marketable securities)  | 
 $  | 
|||||
Complete the second 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.)
| 
 April  | 
 May  | 
 June  | 
||||
| 
 Sales  | 
 $  | 
 60,100  | 
 $  | 
 69,500  | 
 $  | 
 80,000  | 
| 
 Cash sales  | 
 $  | 
|||||
| 
 Lag 1 month  | 
 $  | 
|||||
| 
 Lag 2 months  | 
 $  | 
|||||
| 
 Other income  | 
 $  | 
|||||
| 
 Total cash receipts  | 
 $  | 
|||||
(Round to the nearest dollar. Please input all the values in the table before checking your answers.)
| 
 April  | 
 May  | 
 June  | 
||||
| 
 Disbursements  | 
||||||
| 
 Purchases  | 
 $  | 
 ()  | 
||||
| 
 Rent  | 
 $  | 
 ()  | 
||||
| 
 Wages and salaries  | 
 $  | 
 ()  | 
||||
| 
 Dividends  | 
 $  | 
 ()  | 
||||
| 
 Principal and interest  | 
 $  | 
 ()  | 
||||
| 
 Purchase of new equipment  | 
 $  | 
 0  | 
||||
| 
 Taxes due  | 
 $  | 
 ()  | 
||||
| 
 Total cash disbursements  | 
 $  | 
 ()  | 
||||
(Round to the nearest dollar. Please input all the values in the table before checking your answers.)
| 
 April  | 
 May  | 
 June  | 
||||
| 
 Net cash flow  | 
 $  | 
 ()  | 
||||
| 
 Add: Beginning cash  | 
 $  | 
|||||
| 
 Ending cash  | 
 $  | 
 ()  | 
||||
| 
 Minimum cash  | 
 $  | 
|||||
| 
 Required total financing (notes payable)  | 
 $  | 
|||||
| 
 Excess cash balance (marketable securities)  | 
 $  | 
 0  | 
||||