Question

Grenoble Enterprises had sales of

$ 50,100 in March and $ 60,500 in April. Forecast sales for​ May, June, and July are $ 70,400,$ 79,800, and $99,800 respectively. The firm has a cash balance o f$5,100 on May 1 and wishes to maintain a minimum cash balance of $5,100. Given the following​ data, prepare and interpret a cash budget for the months of​ May, June, and July.

(1) The firm makes 16 % of sales for​ cash, 60 % are collected in the next​ month, and the remaining 24 % are collected in the second month following sale.  

​(2) The firm receives other income of $ 1,600 per month.  

(3) The​ firm's actual or expected​ purchases, all made for​ cash, are $ 49,700 , $ 70, 300 , and $80,100 for the months of May through​ July, respectively.  

(4) Rent is $ 2,600 per month.  ​

(5) Wages and salaries are 12 % of the previous​ month's sales.  

​(6) Cash dividends of $ 3,500 will be paid in June.  

​(7) Payment of principal and interest of $ 3,600 is due in June.  

​(8) A cash purchase of equipment costing $ 5,500 is scheduled in July.  

​(9) Taxes of $ 5,600 are due in June.

March $ 50,100 $ 8,016 April 60,500 $ 9,680 $ May 70,400 Sales Cash sales Lag 1 month Lag 2 months Other income Total cash receipts

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

v 1 06-08 ENG 16-02-202026 - X - X fx 09704 | DK DL DM DN DODPDQDR DSDT DU Dy formula Bar 704 705 706 707 708 GRENOBLE 709 710 711 712 713 MAR APR MAY JUNE JULY 50100 60500 70400 79800 99800 8016 968011264 12768 15968 30060 36300 42240 47880 12024 14520 16896 1600 1600 1600 61188 71128 82344 TOTAL SALES CASH SALES (16% OF SALES) LAG 1 MONTH (60% OF SALES) LAG 2 MONTH (24% OF SALES) OTHER INCOME TOTAL CASH RECEIPTS 714 715 716 717 718 STEP 1 MAR APR 719 721 (12% OF 60500)----> 722 DISBURSEMENTS PURCHASES RENT WAGES & SALARIES DIVIDENDS PRINCIPAL & INTEREST PURCHASE OF NEW EQUIPMENT TAXES DUE TOTAL CASH DISBURSEMENTS MAY JUNE JULY 49700 70300 80100 2600 2600 2600 7260 8448 9576 3500 3600 5500 5600 59560 94048 97776 STEP 2 726 727 T ... CASH BUDGET budget 45 days cycle ROE, BV MV ratio VARIANCE BEP, OLFL ratios DETROIT float B-S profit loss SALES BUDGET dupont ... :

w v ( 06-08 ENG 16-02-207026 - X fix DM744 DK 727 X DL DM DNDODPDQ DR DSDT DU Dy Formula Bara А B A-B ADD 732 733 TOTAL CASH RECEIPTS TOTAL CASH DISBURSEMENTS NET CASH FLOW BEGINNING CASH ENDING CASH MINIMUM CASH REQUIRED TOTAL FINANCING EXCESS CASH BALANCE 61188 71128 59560 94048 1628 -22920 5100 6728 6728 -16192 5100 5100 0 21292 1628 0 (6728-5100] 82344 97776 -15432 -16192 -31624 5100 36724 (31624 + 5100] 0 734 736 737 738 739 740 [16192 + 5100] 741 742 743 744 745 746 747 748 749 750 ... CASH BUDGET budget 45 days cycle ROE, BV MV ratio VARIANCE BEP, OL FL ratios DETROIT float B-S profit loss SALES BUDGET dupont ... :