Archer Electronics Company's actual sales and purchases for April and May are shown here, along with forecasted sales and purchases for June through September.
| Sales |
Purchases |
| April (actual) |
$ 370,000 |
$ 155,000 |
| May (actual) |
350,000 |
145,000 |
| June (forecast) |
325,000 |
145,000 |
| July (forecast) |
325,000 |
205,000 |
| August (forecast) |
340,000 |
225,000 |
| September (forecast) |
380,000 |
220,000 |
The company makes 20 percent of its sales for cash and 80 percent on credit. Of the credit sales, 50 percent are collected in the month after the sale, and 50 percent are collected two months later. Archer pays for 20 percent of its purchases in the month after purchase and 80 percent two months after.
Labor expense equals 15 percent of the current month's sales. Overhead expense equals $12,500 per month. Interest payments of $32,500 are due in June and September. A cash dividend of $52,500 is scheduled to be paid in June. Tax payments of $25,500 are due in June and September. There is a scheduled capital outlay of $350,000 in September.
Archer Electronics' ending cash balance in May is $22,500. The minimum desired cash balance is $10,500.
a. Prepare a schedule of monthly cash receipts for June through September.
b. Prepare a schedule of monthly cash payments for June through September.
c. Prepare a complete monthly cash budget with borrowing and repayments for June through September. The maximum desired cash balance is $50,500. Excess cash (above $50,500) is used to buy marketable securities. Marketable securities are sold before borrowing funds in case of a cash shortfall (less than $10,500). (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Assume the June beginning loan balance and beginning marketable security balance is $0.)