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Cash budget—Basic   Grenoble Enterprises had sales of $50,100 in March and $60,100 in April. Forecast sales...

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 third 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.)

May

June

July

Sales

$

69,500

$

80,000

$

99,800

Cash sales

$

Lag 1 month

$

Lag 2 months

$

Other income

$

Total cash receipts

$

​(Round to the nearest dollar.

May

June

July

Disbursements

Purchases

$

()

Rent

$

()

Wages and salaries

$

()

Dividends

$

0

Principal and interest

$

0

Purchase of new equipment

$

()

Taxes due

$

0

Total cash disbursements

$

()

​(Round to the nearest dollar.

May

June

July

Net cash flow

$

()

Add: Beginning cash

$

()

Ending cash

$

()

Minimum cash

$

Required total financing (notes payable)

$

Excess cash balance (marketable securities)

$

0

The firm should establish a credit line of at least but may need to secure three to four times this amount based on scenario analysis.  ​(Round to the nearest​ dollar.)

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Expert Solution

jeff jeffy answered 1 year ago
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