Homework Help

As an intern for ABC Corp you have been asked to prepare June cash budget. The following information is available for the company, ABC Corp. a) The cash balance on June 1 is $30,000 b) Actual sales for April and May and expected sales for June are as follows: Sales on account are collected over a 3-month period as follows: 30% collected in the month of sale, 50% collected in the month following sale, and 20% collect in the second month following sale. c) Purchases inventory will total $300,000 for June, and 30% of a month's inventory purchases are paid during the month of purchase. The Accts Payable remaining from May's inventory pruchases total $170,000, all of which will be paid in June. d) Selling and admin expenses are budgeted at $520,000 for May. Of this amount, $60,000 is for depreciation. e) A new refrigerator van costing $125,000 will be purchased for cash during June, and dividends totaling $10,000 will be paid in June. The company maintains a minimum cash balance of $20,000. An open line of credit is available from the company's bank to increase its cash balance as needed. The bank requires the company to borrow in increments of $1,000. QUIRED: H1 Calculate the expected cash collections for June. \#2 Calculate the expected cash disbursements for merchandise purchases for June. A3. Prepare a cash budget for June. Indicate in the financing section any borrowing that will be needed during the month. The bank requires borrowing to be made in $1,000 increments. Assume that any interest will not be paid until the following month