Calgon Products, a distributor of organic beverages, needs a cash budget September. The following information is available: for a The cash balance at the beginning of September is $9.150 tual sales for July and August and expected sales for September are as shown below sales on account are collected over a three-month period as follows: 10% ed in the month of sale, 70% remaining in the month following sale, and 18% collected in the second month following sale. The collected 2% is uncollectible: July August September Cash sales 6.800 5,400 7,520 Sales on account 21,500 33,000 43,000 Total sales $28,300 $38.400 $50,520 c purchases for percent a from August’s are paid for during the month of purchase. The accounts payable remaining inventory purchases total which will be paid in September. d. Selling and administrative expenses are budgeted at $14.500 for September Of this amount, $4,600 is for depreciation e Equipment costing $19.500 will be purchased for cash during September and dividends totalling $3,440 will be paid during the month. f. The company maintains a minimum cash balance of $5.300, An open line of credit is available from the company’s bank to bolster the cash position as needed. Assume any borrowings occur at the beginning of the month and repayments occur at the end of the month. Interest on outstanding loan balances during the month must be paid at the end of each month. The monthly interest rate is 0.5%.
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