Cash budget Basic Grenoble Enterprises had sales of $49,500 in March and S60,500
ID: 2815839 • Letter: C
Question
Cash budget Basic Grenoble Enterprises had sales of $49,500 in March and S60,500 in April. Forecast sales for May, June, and July are $69,600, S79,500, and $99,900, respectively. The firm has a cash balance of S4,900 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 17% of sales for cash, 61% are collected in the next month, and the remaining 22% are collected in the second month following sale (2) The firm receives other income of $1,800 per month (3) The firm's actual or expected purchases, all made for cash, are $50,300, $69,600, and $80,400 for the months of May through July, respectively (4) Rent is S3,500 per month (5) Wages and salaries are 10% of the previous month's sales (6) Cash dividends of S3,500 will be paid in June (7) Payment of principal and interest of $3,900 is due in June (8) A cash purchase of equipment costing $6,100 is scheduled in July (9) Taxes of $6,100 are due in JuneExplanation / Answer
Particulars
May
June
July
Particulars
Receipts:
May
June
July
Opening Cash Balance
4,900.00
4,900.00
4,900.00
Cash Sales (Note 1)
11,832.00
13,515.00
16,983.00
Credit Sales (Note 1)
47,795.00
55,766.00
63,807.00
Other Income
1,800.00
1,800.00
1,800.00
Total Receipts (A)
66,327.00
75,981.00
87,490.00
Payments:
Purchases
50,300.00
69,600.00
80,400.00
Rent
3,500.00
3,500.00
3,500.00
Wages & Salaries (Note 2)
6,050.00
6,960.00
7,950.00
Cash Dividend
-
3,500.00
-
Principal & Interest
-
3,900.00
-
Equipment
-
-
6,100.00
Taxes
-
6,100.00
-
Total Payments (B)
59,850.00
93,560.00
97,950.00
Minimum Cash Balance ©
4,900.00
4,900.00
4,900.00
Total Cash Required (B+C)
64,750.00
98,460.00
102,850.00
Surplus / Deficit (A - B - C)
1,577.00
(22,479.00)
(15,360.00)
Financing
-
27,379.00
20,260.00
Closing balance
4,900.00
4,900.00
4,900.00
Particulars
May
June
July
Particulars
Receipts:
May
June
July
Opening Cash Balance
4,900.00
4,900.00
4,900.00
Cash Sales (Note 1)
11,832.00
13,515.00
16,983.00
Credit Sales (Note 1)
47,795.00
55,766.00
63,807.00
Other Income
1,800.00
1,800.00
1,800.00
Total Receipts (A)
66,327.00
75,981.00
87,490.00
Payments:
Purchases
50,300.00
69,600.00
80,400.00
Rent
3,500.00
3,500.00
3,500.00
Wages & Salaries (Note 2)
6,050.00
6,960.00
7,950.00
Cash Dividend
-
3,500.00
-
Principal & Interest
-
3,900.00
-
Equipment
-
-
6,100.00
Taxes
-
6,100.00
-
Total Payments (B)
59,850.00
93,560.00
97,950.00
Minimum Cash Balance ©
4,900.00
4,900.00
4,900.00
Total Cash Required (B+C)
64,750.00
98,460.00
102,850.00
Surplus / Deficit (A - B - C)
1,577.00
(22,479.00)
(15,360.00)
Financing
-
27,379.00
20,260.00
Closing balance
4,900.00
4,900.00
4,900.00
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