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.
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 |
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 |
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) |