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 |