In: Finance
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.
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 March  | 
 April  | 
 May  | 
 June  | 
 July  | 
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 Sales  | 
 $  | 
 $  | 
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 Cash sales (30%)  | 
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 Lag 1 month (65%)  | 
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 Lag 2 months (5%)  | 
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 Other income  | 
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 Total cash receipts  | 
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 March  | 
 April  | 
 May  | 
 June  | 
 July  | 
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 Disbursements  | 
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 Purchases  | 
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 Rent  | 
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 Wages and salaries  | 
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 Dividends  | 
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 Principal and interest  | 
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 Purchase of new equipment  | 
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 Taxes due  | 
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 Total cash disbursements  | 
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 March  | 
 April  | 
 May  | 
 June  | 
 July  | 
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 Net cash flow  | 
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 Add: Beginning cash  | 
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 Ending cash  | 
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 Minimum cash  | 
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 Required total financing (notes payable)  | 
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 Excess cash balance (marketable securities)  | 
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