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Hunt Chemicals is preparing a cash budget for June and July $2019.$ At the end of July

$2019,$ the company has undertaken to repay a $100,000$ loan to their bank which had

been borrowed in February $2019$ to enable the business to survive during the seasonal

peak in the second quarter of the calendar year, April to June. The bank balance at $1$

June $2019$ is expected to be $17,500.$

Budgeted sales revenues are as follows:

Additional information:

$($i$)70\%$ of sales revenue is expected in the month of sales, subject to a $2\%$ prompt

payment discount. $20\%$ of sales revenue is expected in the month following sales. $7\%$

of sales revenue is expected to be received two months after sale and the remainder of

sales revenue is expected to be uncollectable.

$($ii$)$ The average selling price per unit is $100$ and the average cost price is $75.,50\%$ of

the purchase price of goods is expected to be paid in the month of purchase and $50\%$ in

the following month.

$($iii$)$ Target closing inventory is equal to the cost of goods sold in the following month plus

$25\%.$

$($iv$)$ Budgeted annual overheads are $800,000$ which includes $300,000$ of fixed costs of

which $60,000$ is depreciation. The remainder of the overheads are variable costs which

vary with sales revenue and are paid in the month in which they occurred. The

budgeted sales revenue for $2019$ is $3$ million.

$($v$)$ A dividend of $40,000$ will be paid and non$-$current assets costing $50,000$ will be

purchased and paid for in June while corporation tax of $75,000$ will be paid in July.

Required:

$($a$)$ Produce a cash budget for each of the months June and July $2019,$ in columnar form.

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