Kent Resom, a recent University of Phoenix graduate with huge potential, has accepted a position as an entry-level analyst with Builders R Us Manufacturing Company.  The president of the company, U. R. Wright, has requested Kent to provide him with a cash flow analysis for the period of April 30 to June 30, which happens to be the end of the current fiscal year.  The following information is available:


All sales are credit sales, with 20% of sales collected in the month of sales, 60% collected in the month following sales, 15% collected in the second month following the sale, and the remaining 5% written off as bad debt losses in the sixth month following the sale.  Raw materials purchased each month are 75% of the next month’s sales.  Payment for raw materials is made during the month after the purchase.  The company is required to maintain a minimum balance of $5,000 in the checking account, and the balance on April 1st is $6,000.  Rent, insurance, and other expenses are $1,000 per month.


Sales and wage data are as follows:





  Sales Wages
February $ 30,000 $ 3,000
March $ 30,000 $ 3,000





  Sales Wages
April $ 30,000 $ 3,000
May $ 40,000 $ 4,000
June $ 50,000 $ 5,000
July $ 60,000 $ 6,000
August $ 50,000 $ 5,000
September $ 40,000 $ 4,000




Prepare a cash budget for the period April 30 through June 30.  For any month during which a cash shortage is indicated, assume that the Friendly Online National Bank will make funds available.  Use the budget worksheet provided to solve the problem.


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