Prepare cash budget proforma for months june

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Reference no: EM133416600

Assignment

Assume that sales and expenses forecasts for months April, May, June, and July are as follows.

Month	Sales	Expenses
April	$40,000,000	$25,000,000
May	$35,000 000	$20 000.000
June	$50,000 000	$30,000 000
July	$60,000,000	$35,000,000

20% of all sales in a month are paid in the same month, 60% are paid in the next month, and 20% are paid in the second month after. All expenses in a month are paid in the same month. There is a $20,000,000 minimum required cash balance at the end of each month, and any shortage from this minimum requirement will be covered by obtaining a loan.

Any excess over $20,000,000 will be used to reduce or pay off cumulative loans.

Initial cash balance in June is $6,000,000 and there is no cumulative loan at this time.

Monthly prorated tax rate is 2%, and monthly interest rate on cumulative loans is 1%.

Prepare cash budget proforma for months June and July.

Provide in-text citations and references, and explain your work in detail.

Reference no: EM133416600

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