CASE 3 (20 points)

Here are some important figures from the budget of Wise Corporation for the third quarter of 2020:

---------	July	August	September
Credit sales	$1,275,800	$1,483,500	$1,096,300
Credit purchases	765,480	890,160	657,780
Cash disbursements
Wages , taxes and expenses	348,600	395,620	337,150
Interest	29,900	29,900	29,900
Equipment	0	158,900	96,300
Credit sales collection
Collected in month of sale	35%
Collected month after sale	60%
Never Collected	5%
June Credit sales	$1,135,020
June Credit purchases	$681,012

Beginning Cash balance $425,000

All credit purchases are paid in the following month after the purchase.

Instructions:

a) Using the above information, complete the following cash budget. (15 points)

	July	August	September
Beginning cash balance
Cash receipts:
Cash collections from credit sales
Total cash available

Cash disbursements:
Payments for purchases
Wages, taxes, and expenses
Interest
Equipment purchases
Total cash disbursements
Ending cash balance

b) What are the steps in preparing cash budget? Explain. (5 points)