Given the information that follows, prepare a cash budget for the XYZ Store for the first six months of 2010.
- All prices and costs remain constant.
- Sales are 90% for credit and 10% for cash.
- With respect to credit sales, 70% are collected in the month after the sale, 20% in the second month, and 10% in the third. Bad-debt losses are insignificant.
- Sales, actual and estimated, are:
October 2009 $200,000 March 2010 $220,000
November 2009 350,000 April 2010 300,000
December 2009 300,000 May 2010 280,000
January 2010 150,000 June 2010 240,000
February 2010 250,000 July 2010 320,000
- Payments for purchases of merchandise are 80% of the following month's anticipated sales.
- Wages and salaries are:
January 2010 $45,000 April 2010 $55,000
February 2010 40,000 May 2010 60,000
March 2010 50,000 June 2010 57,000
- Rent is $6,000 a month.
- Interest of $9,500 is due on the last day of each calendar quarter, and no quarterly cash dividends are planned.
- A tax prepayment of $70,000 for 2010 income is due in April.
- A capital investment of $80,000 is planned in June, to be paid for then.
- The company has a cash balance of $80,000 at December 31, 2009, which is the minimum desired level for cash. Funds can be borrowed in multiples of $5,000. (Ignore interest on such borrowings.)