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1. The city of Charleston had the following sales of water for the selected months...

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Accounting

1. The city of Charleston had the following sales of water for the selected months of 2016: Month Sales February $50,000 March 45,000 April 60,000 May 42,500 June 70,000 July 120,000 All sales are on credit. Historically, 50 percent is collected in the month of sale, 35 percent during the first month following the sale, and 15 percent in the second month following the sale. Water purchases by month are as follows: Month Sales February $37,500 March 33,750 April 45,000 May 31,875 June 52,500 July 90,000 Water is purchased in the month of sale. All purchases are paid during the month following the purchase. Operating costs are $18,000 and everything is paid in cash except for depreciation, which totals $8,000 a month. The city plans on purchasing some new equipment in May for $25,000 in exchange for a note payable. The April 1 cash balance is expected to be the minimum balance of $5,000. Money can be borrowed from a local bank in increments of $1,000. (Do not include interest charges in your budget.) Required: Prepare a cash budget for April, May, and June. (Check figures: ending cash balance for April, May and June are $14,500, $8,500 and $22,500 respectively.)

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