Question

1. The city of Charleston had the following sales of water for the selected months of 2017:

   Month	Sales
   February	$60,000
   March	45,000
   April	65,000
   May	43,350
   June	110,000
   July	120,000

   All sales are on credit. Historically, 60 percent is collected in the month of sale, 30 percent during the first month following the sale, and 10 percent in the second month following the sale.

   Water purchases by month are as follows:

   Month
   February	$45,000
   March	45,000
   April	40,000
   May	59,750
   June	52,500
   July	90,000

   Water is purchased in the month of sale. All purchases are paid during the month following the purchase.

   Operating costs are $18,000 and everything is paid in cash except for depreciation, which totals $8,000 a month.

   The city plans on purchasing some new equipment in May for $25,000 in exchange for a note payable.

   The April 1 cash balance is expected to be $5,000.

   The city must maintain a minimum cash balance of $10,500, and money can be borrowed from a local bank in increments of$1,000. The city borrows money at the beginning on the first day of the month and repays loans and interest on the last day of the month. The bank charges the city an annual interest rate of 15%.

   Required:

   Prepare a cash budget for April, May, June and in for the quarter, and based on your answer complete the following table:

   Round to the nearest dollar and DO NOT enter decimals or commas and if a zero needs to be entered, enter "0".

   		April	May	June	Quarter
   Beginning Cash Balance		$ 5,000	$ 10,500	$10,510	$ 5,000
   Cash Collections		$	$	$	$
   Water disbursements		$()	$()	$()	$()
   Operating Costs		$()	$()	$()	$()
   Borrowings		$	$	$	$
   Repayments		$	$	$	$
   Interest		$	$	$	$
   Ending cash balance		$10,500	$10,510	$24,215	$ 24,215

25 points   

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Answer 1

		April	May	June	Quarter
Beginning Cash Balance		$ 5,000	$ 10,500	$10,510	$ 5,000
Cash Collections		$58500	$50010	$85505	$
Water disbursements		$(45000)	$(40000)	$(59750)	$(144750)
Operating Costs		$(10000)	$(10000)	$(10000)	$(30000)
Borrowings		$2000	$	$	$2000
Repayments		$	$	$-2000	$-2000
Interest		$	$	$-50[2000*15%]/12*2months]	$-50
Ending cash balance		$10,500	$10,510	$24,215	$ 24,215

(1)CASH RECEIPTS

	apr	may	jun
sales	65000	43350	110000
receipts of feb	6000[60000*10%]
mar	13500[45000*30%]	4500[45000*10%]
apr	39000[65000*60%]	19500[65000*30%]	6500[65000*10%]
may		26010[43350*60%]	13005[43350*30%]
june			66000[110000*60%]
Total	58500	50010	85505

operating cost are 18000-8000noncash =10000$