Question

iRequirements 1 1. Calculate the cash that Best Breath expects to collect in April, May and June 2018 from sales and service revenue. Show calculations for each month. Best Breath has budgeted expenditures for May of $11,500 and requires a minimum cash balance of $300 at the end of each month. It has a cash balance on May 1 of $100. a. Given your answer to requirement 1, will Best Breath need to borrow cash to cover its 2. payments for May and maintain a minimum cash balance of S300 at the end of May? b. Assume (independently for each situation) that (1) May total revenues might also be 10% lower or that (2) total costs might be 5% higher. Under each of those two scenarios, show the total net cash for May and the amount Best Breath would have to borrow to cover its cash payments for May and maintain a minimum cash balance of $300 at the end of May. (Again, assume a balance of $100 on May 1.) 3. Why do Best Breath's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? Has preparing the cash budget been helpful? Explain briefly.

Questions are 2b (Fill the Cash Budget for May), and 3.  

IF UNCLEAR Requirement 2b says: Assume​ (independently for each​ situation) that​ (1) May total revenues might be 10% lower or that​ (2) total costs might be 5% higher. Under each of those two​ scenarios, show the total net cash for May and the amount Best Breath would have to borrow to cover its cash payments for May and maintain a minimum cash balance of $300at the end of May.​ (Again, assume a balance of $100 on May​ 1.)

First calculate the cash excess or deficiency for May using the original numbers and under each scenario presented. On the next​line, enter the amount of borrowing required.

Answer 1

Hi, giving below answer for part-2 which is explained below in working. Please get back if need any further explanation. Happy to help.

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	Original Number	May Revenue decrease by 10%	May Cost increase by 5%
Cash Balance beginning	100	100	100
Add Receipts (Working-1)	12575	11443	12575
Total Cash Available	12675	11543	12675
Disbursments (Working-1)	11500	11500	12075
Minimum Cash Balance Desired	300	300	300
Total Cash Needed	11800	11800	12375
Cash Excee (Deficiency)	875	-257	300

Working-1
Receipts			Same as Original
May Sales Revenue collected in May (97% of (7500-10% decrease)		6548
April Service revenue collected in May (Same as original)		1250
May Service Revenue collected in May (75% of (5400-10% decrease)		3645
Total		11443
Disbursment		Same as original	5% increase from 11500=12075