Cash budget—Basic Grenoble Enterprises had sales of $50,100 in March and $60,200 in April. Forecast sales for May, June, and July are $69,600, $80,400, and $99,600, 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 15% of sales for cash, 65% are collected in the next month, and the remaining 20% are collected in the second month following sale. (2) The firm receives other income of $1,500 per month. (3) The firm's actual or expected purchases, all made for cash, are $50,200, $70,300, and $79,900 for the months of May throughJuly, respectively. (4) Rent is $2,600 per month. (5) Wages and salaries are 9% of the previous month's sales. (6) Cash dividends of $3,400 will be paid in June. (7) Payment of principal and interest of $3,700 is due in June. (8) A cash purchase of equipment costing $6,000 is scheduled in July. (9) Taxes of $5,500 are due in June.
Cash budget—Basic Grenoble Enterprises had sales of $50,100 in March and $60,200 in April. Forecast sales for May, June, and July are $69,600, $80,400, and $99,600, 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 15% of sales for cash, 65% are collected in the next month, and the remaining 20% are collected in the second month following sale. (2) The firm receives other income of $1,500 per month. (3) The firm's actual or expected purchases, all made for cash, are $50,200, $70,300, and $79,900 for the months of May throughJuly, respectively. (4) Rent is $2,600 per month. (5) Wages and salaries are 9% of the previous month's sales. (6) Cash dividends of $3,400 will be paid in June. (7) Payment of principal and interest of $3,700 is due in June. (8) A cash purchase of equipment costing $6,000 is scheduled in July. (9) Taxes of $5,500 are due in June.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
budget—Basic
Grenoble Enterprises had sales of
$50,100
in March and
$60,200
in April. $69,600,
$80,400,
and
$99,600,
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
15%
of sales for cash,
65%
are collected in the next month, and the remaining
20%
are collected in the second month following sale. (2) The firm receives other income of
$1,500
per month. (3) The firm's actual or expected purchases, all made for cash, are
$50,200,
$70,300,
and
$79,900
for the months of May throughJuly, respectively. (4) Rent is
$2,600
per month. (5) Wages and salaries are
9%
of the previous month's sales. (6) Cash dividends of
$3,400
will be paid in June. (7) Payment of principal and interest of
$3,700
is due in June. (8) A cash purchase of equipment costing
$6,000
is scheduled in July. (9) Taxes of
$5,500
are due in June.
Transcribed Image Text:Complete the first month of the cash budget for Grenoble Enterprises below: (Round to the nearest dollar. Please input all the
values in the table before checking your answers.)
March
April
May
Sales
50,100 $
60,200 $
69,600
Cash sales
7,515
9,030 $
Lag 1 month
Lag 2 months
$
Other income
2$
Total cash receipts
$
%24
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