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The controller of Feinberg Company is gathering data to prepare the cash budget for July. He plans to dvelop the budget from the following information:

a. Of all sales, 40% are cash sales

b. Of credit sales, 45% are collected within the month of sale. Half of the credit sales collected within the month receive a 2% cash discount (for accounts paid within 10 days). Thirty percen of credit sales are collected in the following month, remaining credit sales are collected the month thereafter. there are virtually no bad debts.

c. Sales for the second two quarters of the year follow. (Note: the first three months are actual sales and the last three months are estimated sales)

Sales

April $ 450,000

May 580,000

June 900,000

July 1,140,000

August 1,200,000

September 1,134,000

d. the company sells all that it produces each month. the cost of raw materials equals 26% of each sales dollar. The company requires a monthly ending inventory of raw materials equal to the coming month's production requirements. Of raw materials purchases, 50% are paid for in the month of purchase. The remaining 50% is paid for in the following month.

e. Wages total $105,000 each month and are paid in the month incurred

f. Budgeted monthly operating expense total $376,000 of which $45,000 is depreciation and $6,000 is expiration of prepaid insurance (the annual premium of $72,000 is paid on January 1).

g. Dividends of $130,000, declared on June 30 will be paid on July 15

h. Old equipment will be sold for $25,500 on July 4

i. On July 13, new equipment will be purchased for $173,000

j. The company maintains a minimum cash balance of $20,000

k. The cash balance on July 1 is $27,000

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