Reference no: EM132755006

Castor Inc., is preparing its master budget for the quarter ending June 30, 2020. Budgeted sales and cash payments for merchandise for the quarter follow.

Budgeted                                           April                 May              June

Sales                                         $32,000             $40,000    $24,000
Cash payments for merchandise         $20,200            $16,800      $17,200

Sales are made 50% for cash and 50% for credit. All credit sales are collected in the month following the sale. The March 31 balance sheet includes balances of cash of $12,000, accounts receivable of $12,000, $11,000 of accounts payable, and a $2,000 balance of loans payable. The company maintains a minimum cash balance of $12,000 at the end of each month. Loans are obtained at the end of any month in which the $12,000 won't otherwise be met. Interest of 1% on the beginning-of-month balance of any loan is paid at the end of that month. If an excess balance of $12,000 at the end of month exists, any loan balance is repaid or reduced at the end of the month.

Operating expenses are paid in the month incurred and include sales commissions at 10% of sales, shipping costs at 2% of sales, office salaries at $5,000 per month, and rent at $3,000 per month.

Problem 1: Prepare a cash budget for April, May, and June. Round all amounts to whole dollars. Show all calculations in some way.