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(solution) Grenoble Enterprises had sales of $50,000 in March and $60,000 in


Grenoble 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 $5,000 on May 1 and wishes

to maintain a minimum cash balance of $5,000. Given the following data, prepare

and interpret a cash budget for the months of May, June, and July.

(1) The firm makes 20% of sales for cash, 60% are collected in the next month,

and the remaining 20% are collected in the second month following sale, 

(2) The firm receives other income of $2,000 per month.
(3) The firm?s actual or expected purchases, all made for cash, are $50,000,
$70,000, and $80,000 for the months of May through July, respectively.
(4) Rent is $3,000 per month.
(5) Wages and salaries are 10% of the previous month?s sales.
(6) Cash dividends of $3,000 will be paid in June.
(7) Payment of principal and interest of $4,000 is due in June.
(8) A cash purchase of equipment costing $6,000 is scheduled in July.
(9) Taxes of $6,000 are due in June.


Beginning balance

 

Sales Collection Total Sales collection

 

Add other income

 

Total Cash Receipts

 

Available Cash Balance

 

less Payments

 

Purchases

 

Rent

 

Salaries and Wages

 

Dividend

 

Payment of loan...

 


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