Jamestown Company is preparing a cash budget for July. The following estimates were made:
(a) Expected cash balance, July 1, $5,000.
(b) Income tax rate is 40%, based on accounting income for the month, payable in the following month.
(c) Customers pay for 50% of their purchases during the month of purchase and the balance during the following month. Bad debts are expected to be 2%.
(d) Merchandise is purchased on account for resale, with 25% of purchases paid for during the month of purchase and the balance paid during the following month.
(e) Marketing and administrative expenses are all paid in the current month.
(f) Dividends of $15,000 will be declared and paid during July.
(g) The company always maintains at least a minimum month-end cash balance of $5,000.
(h) Other budgets include the following estimates:

Required:
(1) Prepare a cash budget for July.
(2) What financial action needs to be taken as a result of this cash budget?

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June July $30,000 $40,000 0,000 15,000 Sales (all on account) Depreciation expense for marketing and administration.... Costs of goods sold Other marketing and administrative 5000 6,000 12,000 16,000 expenses. 9,000 10,000