Block 17e Chapter 4 Problem 26 Archer Electronics Company's actual sales and purchases for April and May are shown here, along with forecasted sales and purchases for June through September. April (actual) May (actual) June (forecast) July (forecast) August (forecast) September (forecast) Sales $ 370,000 350,000 325,000 325,000 340,000 380,000 Purchases $ 155,000 145,000 145,000 205,000 225,000 220,000 The company makes 20 percent of its sales for cash and 80 percent on credit. Of the credit sales, 50 percent are collected in the month after the sale, and 50 percent are collected two months later. Archer pays for 20 percent of its purchases in the month after purchase and 80 percent two months after. Labor expense equals 15 percent of the current month's sales. Overhead expense equals $12,500 per month. Interest payments of $32,500 are due in June and September. A cash dividend of $52,500 is scheduled to be paid in June. Tax payments of $25,500 are due in June and September. There is a scheduled capital outlay of $350,000 in September. Archer Electronics' ending cash balance in May is $22,500. The minimum desired cash balance is $10,500. a. Prepare a schedule of monthly cash receipts for June through September. Prepare the monthly cash payments for June through September. b. c. Prepare a complete monthly cash budget with borrowing and repayments for June through September. The maximum desired cash balance is $50,500. Excess cash (above $50,500) is used to buy marketable securities. Marketable securities are sold before borrowing funds in case of a cash shortfall (less than $10,500). (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign.) Input variables: April May June July August September Sales Purchases $ 370,000 $ 155,000 $ 350,000 $ 145,000 $ 325,000 $ 45,000 $ 325,000 $ 205,000 $ 340,000 $ 225,000 $ 380,000 $ 220,000 20 percent 80 percent percent percent percent percent percent of current month's sales Cash sales % Credit sales % Credit sales collected following month % Credit sales collected two months after sale % Purchases paid following month % Purchases paid two months after purchase % Labor expense % Overhead expense per month June and September interest payments June cash dividend June and September tax payments September capital outlay May ending cash balance Minimum desired cash balance C. Maximum desired cash balance Solution and Explanation