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4. (14 points) Marsha Department Stores has budgeted sales revenues as foows: $250,000 190,000 Credit sales July August September 150,000 October 140,000 In the past, 68% of the credit saes were coected in the month of sale, 22% were collected in the first month folowing the sale and 10% in the second month following the sale. Purchases of inventory are all on credit and 29% is paid in the month of purchase and 71% in the month following purchase. Budgeted inventory purchases are: $200,000 100,000 125, 000 150,000 July August September October Other cash disbursements budgeted: (a) selling and administrative expenses of $25,000 each month, (b) dividends of $45,000 will be paid in September, and (c) purchase of a used van in October for $60,000 cash. The company wishes to maintain a minimum cash balance of $50,000 at the end of each month. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on September 1 was $50,000 If money is borrowed, ignore interest INSTRUCTIONS (a) Prepare separate schedules for (1) expected collections from customers and (2)expected payments for purchases of inventory. SHOW ALL CALCULAT I ONS (b) Prepare a cash budget for the months of September and October. ate SHOW ALL COMPUTATIONS OR NO CREDIT GIVEN 1 (1) Expected collections from customers glod Marshall Department Stores Cash Budget For the Two Months Ending October 31 September October 1% 14

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