Cash budget-prepare and interpret a cash budget

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Reference no: EM131530287

Cash budget—Basic Grenoble Enterprises had sales of $49,700 in March and $60,500 in April. Forecast sales for? May, June, and July are $69,700?, $79,500?,And $100,200?, respectively. The firm has a cash balance of $4,800 on May 1 and wishes to maintain a minimum cash balance of $4,800. Given the following? data, prepare and interpret a cash budget for the months of? May, June, and July.

?(1) The firm makes 22 %of sales for? cash, 59 % are collected in the next? month, and the remaining 19% are collected in the second month following sale.

?(2) The firm receives other income of $2,300 per month.

?(3) The? firm's actual or expected? purchases, all made for? cash, are $49,700?, $69,600?, And $79,500 for the months of May through? July, respectively.

?(4) Rent is $3,100 per month.

?(5) Wages and salaries are 12% of the previous? month's sales.

?(6) Cash dividends of $2,900 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 $6,500 is scheduled in July.

?(9) Taxes of $6,300 are due in June.

Reference no: EM131530287

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