Farmers Delight Corporation reported sales of $350,000 in June, $380,000 in July, and $390,000 in August. The forecasts for September, October, and November are $385,000, $418,000, and $429,000 respectively. The initial cash balance of September 1 is $150,000, and a minimum of $8,000 should be kept. Use the given information to compile a cash budget for the months of September, October, and November.
1. Famers Delight predicts that %5 of its sales will never be collect, 30% of its sales will be cash sales, and the remaining 65% will be collected in the following month.
2. Famers Delight receives other monthly income of $3000
3. The actual or expected purchases are $150,000, $120,000, and $115,000 for the months of September, to November, respectively, and 50% are paid in cash while the remainder is paid in the following month. The purchases for August were $120,000.
4. Monthly rent is $3,500 chargeable only in October and November
5. Wages and salaries are 12% of the previous months sales
6. Cash dividends of $4,600 are declared and will be paid in September
7. Long-Term loan repayment of principal and interest of $4,700 is due in October
8. Additional equipment costing $8,500 is ordered and scheduled to be paid for in cash in November
9. Taxes if $8,250 are due in November