Todd Enterprises is preparing a cash budget for the second quarter of the coming year. The following data have been forecasted:
(15 points, please label your answer in a cash budget format) April May Sales ………………………………………………. $150,000 $157,500 Merchandise purchases …………………………… 107,000 112,400 Operating expenses: Payroll …………………………………………. 13,600 14,280 Advertising ……………………………………. 5,400 5,700 Rent ……………………………………………. 2,500 2,500 Depreciation …………………………………… 7,500 7,500 End of April balances: Cash ……………………………………………. 30,000 Bank loan payable ……………………………… 26,000 Additional data: (1) Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000. (2) Purchases are all on credit, with 40% paid in the month of purchase and 60% paid in the following month. (3) Operating expenses are paid in the month they are incurred. (4) A minimum cash balance of $25,000 is required at the end of each month. (5) Loans are used to maintain the minimum cash balance. At the end of each month, interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month. Repayments are made at the end of the month if the cash balance exceeds $25,000. Prepare the company's cash budget for May. Show the ending loan balance at May 31.
