Cash budget---Basic
Grenoble Enterprises had sales of $50,500 in March and $60,000 in April. Forecast sales for May, June, and July are $69,600, $79,800, and $99,800, respectively. The firm has a cash balance of $4,900 on May 1 and wishes to maintain a minimum cash balance of $4,900. Given the following data, prepare and interpret a cash budget for the months of May, June, and July.
(1) The firm makes 25% of sales for cash, 64% are collected in the next month, and the remaining 11% are collected in the second month following sale.
(2) The firm receives other income of $2,100 per month.
(3) The firm’s actual or expected purchases, all made for cash, are $50,400, $69,500, and $80,300 for the months of May through July, respectively.
(4) Rent is $3,100 per month.
(5) Wages and salaries are 9% of the previous month’s sales.
(6) Cash dividends of $3,300 will be paid in June.
(7) Payment of principal and interest of $3,800 is due in June.
(8) A cash purchase of equipment costing $5,700 is scheduled in July.
(9) Taxes of $6,100 are due in June.
Complete the cash budget for May, June, and July.