Prepare and interpret cash budget for the months

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Reference no: EM131825059

Grenoble Enterprises had sales of $49,900 in March and $59,700 in April. Forecast sales for? May, June, and July are $69,500?,$80,400?, and $99,800?, respectively. The firm has a cash balance of $5,300 on May 1 and wishes to maintain a minimum cash balance of $5,300. Given the following? data, prepare and interpret a cash budget for the months of? May, June, and July.

?(1) The firm makes 20% of sales for? cash, 61% are collected in the next? month, and the remaining 19% are collected in the second month following sale.

?(2) The firm receives other income of $1,800 per month.

?(3) The? firm's actual or expected? purchases, all made for? cash, are $49,700?, $69,900?, and $80,100 for the months of May through? July, respectively.

?(4) Rent is $2,700 per month.

?(5) Wages and salaries are 9 % of the previous? month's sales.

?(6) Cash dividends of $3,000 will be paid in June.

?(7) Payment of principal and interest of $3,900 is due in June.

?(8) A cash purchase of equipment costing $5,700 is scheduled in July.

?(9) Taxes of $6,300 are due in June.

Reference no: EM131825059

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