Kelsey is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for merchandise for the next three months follow:
Budgeted July August September
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(64,000 \)80,000 \(48,000
Cash payments for merchandise . . . . . . . . . . . . . 40,400 33,600 34,400
Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of \)15,000 in cash; \(45,000 in accounts receivable; \)4,500 in accounts payable; and a \(5,000 balance in loans payable. A minimum cash balance of \)15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries (\(4,000 per month), and rent (\)6,500 per month). (1) Prepare a cash receipts budget for July, August, and September. (2) Prepare a cash budget for each of the months of July, August, and September. (Round all dollar amounts to the nearest whole dollar.)
