Ryan Richards, controller for Grange Retailers, has assembled the following data to assist in the preparation of a cash budget for the third quarter of the year:Sales:May (actual)$100,000June (actual)120,000July (estimated)90,000August (estimated)100,000September (estimated)135,000October (estimated)110,000Each month, 30% of sales are for cash and 70% are on credit. The collection pattern for credit sales is 20% in the month of sale, 50% in the following month, and 30% in the second month following the sale.Each month, the ending inventory exactly equals 50% of the cost of next month's sales. The markup on goods is 25% of cost.Inventory purchases are paid for in the month following the purchase.Recurring monthly expenses are as follows:Salaries and wages$10,000Depreciation on plant and equipment4,000Utilities1,000Other1,700Property taxes of $15,000 are due and payable on July 15.Advertising fees of $6,000 must be paid on August 20.A lease on a new storage facility is scheduled to begin on September 2. Monthly payments are $5,000.The company has a policy to maintain a minimum cash balance of $10,000. If necessary, it will borrow to meet its short-term needs. All borrowing is done at the beginning of the month. All payments on principal and interest are made at the end of a month. The annual interest rate is 9%. The company must borrow in multiples of $1,000.A partially completed balance sheet as of June 30 follows. (Note: Accounts payable is for inventory purchases only.)

Ryan Richards, controller for Grange Retailers, has assembled the following data to assist in the preparation of a cash budget for the third quarter of the year: Sales: May (actual) $100,000 June...

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Ryan Richards, controller for Grange Retailers, has assembled the following data to assist in the preparation of a cash budget for the third quarter of the year:

Sales:
May (actual) $100,000
June (actual) 120,000
July (estimated) 90,000
August (estimated) 100,000
September (estimated) 135,000
October (estimated) 110,000
Each month, 30% of sales are for cash and 70% are on credit. The collection pattern for credit sales is 20% in the month of sale, 50% in the following month, and 30% in the second month following the sale.
Each month, the ending inventory exactly equals 50% of the cost of next month's sales. The markup on goods is 25% of cost.
Inventory purchases are paid for in the month following the purchase.
Recurring monthly expenses are as follows:
Salaries and wages $10,000
Depreciation on plant and equipment 4,000
Utilities 1,000
Other 1,700
Property taxes of $15,000 are due and payable on July 15.
Advertising fees of $6,000 must be paid on August 20.
A lease on a new storage facility is scheduled to begin on September 2. Monthly payments are $5,000.
The company has a policy to maintain a minimum cash balance of $10,000. If necessary, it will borrow to meet its short-term needs. All borrowing is done at the beginning of the month. All payments on principal and interest are made at the end of a month. The annual interest rate is 9%. The company must borrow in multiples of $1,000.
A partially completed balance sheet as of June 30 follows. (Note: Accounts payable is for inventory purchases only.)

Answered Same Day Dec 26, 2021

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Robert answered on Dec 26 2021

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Ryan Richards, controller for Grange Retailers, has assembled the following data to assist in the preparation of a cash budget for the third quarter of the year: Sales: May (actual) $100,000 June...

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May (actual)	$100,000
June (actual)	120,000
July (estimated)	90,000
August (estimated)	100,000
September (estimated)	135,000
October (estimated)	110,000

Salaries and wages	$10,000
Depreciation on plant and equipment	4,000
Utilities	1,000
Other	1,700