Grenoble Enterprises had sales of $49,700 in March and $59,900 in April. Forecast sales for May, June, and July are $70,300,$79,500, and $99,600, respectively. The firm has a cash balance of $4,800 on May 1 and wishes to maintain a minimum cash balance of $4,800. Given the following data, prepare and interpret a cash budget for the months of May, June, and July. (1) The firm makes 22% of sales for cash, 63% are collected in the next month, and the remaining 15% are collected in the second month following sale. (2) The firm receives other income of $1,600 per month. (3) The firm's actual or expected purchases, all made for cash, are $49,600, $70,200, and $79,500 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 $3,500 will be paid in June. (7) Payment of principal and interest of $4,200 is due in June. (8) A cash purchase of equipment costing $6,400 is scheduled in July. (9) Taxes of $6,400 are due in June.
Grenoble Enterprises had sales of $49,700 in March and $59,900 in April. Forecast sales for May, June, and July are $70,300,$79,500, and $99,600, respectively. The firm has a cash balance of $4,800 on May 1 and wishes to maintain a minimum cash balance of $4,800. Given the following data, prepare and interpret a cash budget for the months of May, June, and July. (1) The firm makes 22% of sales for cash, 63% are collected in the next month, and the remaining 15% are collected in the second month following sale. (2) The firm receives other income of $1,600 per month. (3) The firm's actual or expected purchases, all made for cash, are $49,600, $70,200, and $79,500 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 $3,500 will be paid in June. (7) Payment of principal and interest of $4,200 is due in June. (8) A cash purchase of equipment costing $6,400 is scheduled in July. (9) Taxes of $6,400 are due in June.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Grenoble Enterprises had sales of $49,700 in March and $59,900 in April. Forecast sales for May, June, and July are $70,300,$79,500, and $99,600,
respectively. The firm has a cash balance of $4,800 on May 1 and wishes to maintain a minimum cash balance of $4,800.
Given the following data, prepare and interpret a cash budget for the months of May, June, and July.
respectively. The firm has a cash balance of $4,800 on May 1 and wishes to maintain a minimum cash balance of $4,800.
Given the following data, prepare and interpret a cash budget for the months of May, June, and July.
(1) The firm makes 22% of sales for cash, 63% are collected in the next month, and the remaining 15% are collected in the second month following sale.
(2) The firm receives other income of $1,600 per month.
(3) The firm's actual or expected purchases, all made for cash, are $49,600,
$70,200, and $79,500 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 $3,500 will be paid in June.
(7) Payment of principal and interest of $4,200 is due in June.
(8) A cash purchase of equipment costing $6,400 is scheduled in July.
(9) Taxes of $6,400 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
$
49,700 $
59,900 $
70,300
Cash sales
10,934
13,178 $
Lag 1 month
$
Lag 2 months
$
Other income
$
Total cash receipts
$
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