The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the nextthree months. You are presented with the following budget information: June July August

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $160,000 $185,000 $200,000

Manufacturing costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,000 82,000 105,000

Selling and administrative expenses . . . . . . . . . . . . . . . . . . 40,000 46,000 51,000

Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% areexpected to be collected in the month following the sale and the remainder the following month(second month after sale). Depreciation, insurance, and property tax expense represent $12,000 of theestimated monthly manufacturing costs. The annual insurance premium is paid in February, and theannual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% areexpected to be paid in the month in which they are incurred and the balance in the following month.Current assets as of June 1 include cash of $42,000, marketable securities of $25,000, and ac-counts receivable of $198,000 ($150,000 from May sales and $48,000 from April sales). Sales onaccount in April and May were $120,000 and $150,000, respectively. Current liabilities as of June1 include $13,000 of accounts payable incurred in May for manufacturing costs. All selling andadministrative expenses are paid in cash in the period they are incurred. An estimated income taxpayment of $24,000 will be made in July. Mercury Shoes regular quarterly dividend of $15,000 isexpected to be declared in July and paid in August. Management desires to maintain a minimumcash balance of $40,000.

1. Prepare a monthly cash budget and supporting schedules for June, July, and August