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Cash Budget Background: Sales for July, August, and September are expected to be $200,000, $210,000, and...

Cash Budget

Background: Sales for July, August, and September are expected to be $200,000, $210,000, and $190,000, respectively, for Pasta Company. All sales are on account and are collected 50% in the month of the sale and 45% in the following month. The remaining 5% is determined to be uncollectible. Raw materials are purchased one month before being needed, and all purchases and expenses are paid for as incurred. The cash balance at 8/1/2017 is $8750. Activities for the quarter are expected to be:

July August September
Sales $200,000 $210,000 $190,000
Raw materials used $40,000 $36,000 $44,000
Salaries $80,000 $85,000 $75,000
Maintenance and repairs $18,000 $18,000 $18,000
Depreciation $36,000 $36,000 $36,000
Utilities and other $15,000 $15,000 $15,000
Dividends paid -0- $10,000 -0-
Payment on bonds $8,000 $8,000 $8,000
Directions:  Prepare a cash budget and management recommendations for August 2017.
Business   Economics   
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