Problem: G Enterprises had sales of $50,000 in March and $60,000 in April. Forecast sales for May June and July are $70,000, $80,000 and $100,000 respectively. The firm has a cash balance of $5000 on May 1st and wants to maintain a minimum cash balance of $5000.
Prepare and interpret a cash budget for May June and July
1) Te firm make 20% of sales for cash
2) The firm receives $2000 of other income per month
3) The firm's actual or expected purchases, all made for cash are $50000, $70000, $80000 for the months of May thru July respectively
4) Rent is $3000 per month
5) Wages and salaries are 10% of the previous month's sales
6) Cash dividends of $3000 will be paid in June
7) Principle and interest $4000 due June
8) A cash purchase of equipment costs $6000 scheduled in July
9) Taxes due in June $6000.