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Cash budgetlong dash—Basic Grenoble Enterprises had sales of $50,200 in March and $59,600 in April. Forecast...

Cash budgetlong dash—Basic Grenoble Enterprises had sales of $50,200 in March and $59,600 in April. Forecast sales for​ May, June, and July are $70,000​, $80,500​,

and $99,500​, 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 22% of sales for​ cash, 65% are collected in the next​ month, and the remaining 13% 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 $49,700​, $70,500​, and $80,000

for the months of May through​ July, respectively.  ​

(4) Rent is $2,800per month.  ​

(5) Wages and salaries are 12% of the previous​ month's sales.  

​(6) Cash dividends of $2,900 will be paid in June.  

​(7) Payment of principal and interest of $4,000 is due in June.  ​

(8) A cash purchase of equipment costing $5,800 is scheduled in July.

  ​(9) Taxes of $5,800 are due in June.

March

April

May

June

July

Sales

$

$

Cash sales (30%)

Lag 1 month (65%)

Lag 2 months (5%)

Other income

Total cash receipts

March

April

May

June

July

Disbursements

Purchases

Rent

Wages and salaries

Dividends

Principal and interest

Purchase of new equipment

Taxes due

Total cash disbursements

March

April

May

June

July

Net cash flow

Add: Beginning cash

Ending cash

Minimum cash

Required total financing (notes payable)

Excess cash balance (marketable securities)

Solutions

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