Grenoble Enterprises had sales of $50,000 in March and $60,000 in April. Forecasted sales in May, June, and July are $70,000, $80,000, and $100,000, respectively. On May 1, the company has a cash balance of $5,000 and wants to maintain a minimum cash balance of $5,000.
Using the following data, prepare and interpret a cash budget for the months of May, June and July.
The company makes 20% of its sales in cash, collects 60% the following month and collects the remaining 20% in the second month after the sale.
The company receives another income of $2,000 per month.
The amounts of the company's actual or expected purchases, all in cash, are $50,000, $70,000, and $80,000 in the months of May through July, respectively.
The rent is $3,000 per month.
Salaries and wages correspond to 10% of sales from the previous month.
Cash dividends of $3,000 will be paid in June.
A principal and interest payment of $4,000 will be made in June.
A cash purchase of equipment costing $6,000 is scheduled in July.
Taxes of $6,000 will be paid in June
ENGLISH

Description:

Grenoble Enterprises had sales of $50,000 in March and $60,000 in April. Forecasted sales in May, June, and July are $70,000, $80,000, and $100,000, respectively. On May 1, the company has a cash balance of $5,000 and wants to maintain a minimum cash balance of $5,000. Using the following data, prepare and interpret a cash budget for the months of May, June, and July. The company makes 20% of its sales in cash, collects 60% the following month, and collects the remaining 20% in the second month after the sale. The business receives another income of $2,000 per month. The amounts of the company's current or expected purchases, all in cash, are $50,000, $70,000, and $80,000 for the months of May through July, respectively. Rent is $3,000 per month. Wages and salaries correspond to 10% of the sales of the previous month. Cash dividends of $3,000 will be paid in June. A principal and interest payment of $4,000 will be made in June. A cash purchase of equipment is scheduled to cost $6,000 in July. Taxes of $6,000 will be paid in June

 

Answer rating: 100% (QA)

To prepare a cash budget for Grenoble Enterprises for the months of May June and July well outline the cash inflows and outflows for each month based ... View the full answer