CBD Computer Inc. is attempting to estimate its needs for funds during each of the months covering the third
quarter of 20XX. Pertinent information is given below:
a. Past and estimated future sales for 20XX:
April $80,000 July $90,000
May 95,000 August 130,000
June 70,000 September 110,000
October 140,000
b. Rent expense is $2,500 per month.
c. A quarterly interest payment on $100,000 in 7% notes payable is to be paid during September, 20XX.
d. Wages and salaries are estimated as follows:
July $8,000
August 10,000
September 12,000
Payments are made within the month in which the wages are earned.
e. Sixty percent of sales are for cash, with the remaining 40% collected in the month following the sale.
f. CBD pays 80% of the sales price for merchandise and makes payment in the same month in which the sales
occur, although purchases are made in the month prior to the anticipated sales.
g. CBD plans to pay $7,500 in cash for a new forklift truck in July.
h. Short-term loans can be obtained at the end of each month at 13% annual interest with interest paid during
each month for which the loan is outstanding.
i. CBD's ending cash balance for June 30, 200X is $67,000:
the minimum balance the firm wishes to have in any month is $35,000.
Required: Set up a cash budget for CBD for the quarter ended September 30, 20XX.
Worksheet
June July August September
Sales $70,000 $90,000 $130,000 $110,000
Cash sales 54,000 78,000 66,000
Collections (40% 1 month later) 28,000 36,000 52,000
Total cash collection $82,000 $114,000 $118,000
Cash Budget
Cash receipts from sales $82,000 $114,000 $118,000
Cash disbursements
Payments on purchases (72,
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