Harry's House of Hamburgers (HHH) wants to prepare a cash budget for months of June through November. Using the following information, prepare the cash budget schedule and interpret the results. Will Harry need additional financing?
Bonus:
If Harry's House of Hamburgers (HHH) received a 2% 10 day discount on purchases, is it worth taking discount with the current cash budget.
a. Sales were $50,000 in June and $60,000 in July. Sales have been forecasted to be $65,000, $72,000, $63,000, $59,000, and $56,000 for months of August, September, October, November, and December, respectively. In the past, 10% of sales were on cash basis, and the collection was 50% in the first month and 40% in the second month.
b. Every four months (three times a year) $500 of dividends from investments are expected. The first dividend payment was received in January.
c. Current purchases are 60% of sales of next month’s sales, 15% of which are paid in cash, 65% are paid one month later, and the rest is paid two months after purchase.
d. $8,000 dividends are paid twice a year (in March and September).
e. The monthly rent is $2,000.
f. Taxes are $6,500 payable in November.
g. A new hamburger press will be purchased in October for $2,300.
h. $1,500 interest will be paid in October.
i. $1,000 loan payments are paid every month.
j. Wages and salaries are $1,000 plus 5% of sales in each month.

HHH would like to maintain a minimum cash balance of $10,000.