The owner of a small mining supply company has requested a cash budget for June. After examining…


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The owner of a small mining supply company has requested a cash budget for June. After examining… 1 answer below » The owner of a small mining supply company has requested a cash budget for June. After examining the records of the company, you find the following: a.      Cash balance on June 1 is $345. b.      Actual sales for April and May are April View complete question » The owner of a small mining supply company has requested a cash budget for June. After examining the records of the company, you find the following: a.      Cash balance on June 1 is $345. b.      Actual sales for April and May are April                     May Cash sales $ 10,000 $15,000 Credit sales 25,000 25,000 Total sales $35,000 $40,000 c.       Credit sales are collected over a three-month period: 50 percent in the month of sale, 30 percent in the second month, and 15 percent in the third month. The sales collected in the third month are subject to a 1.5 percent late fee, but only half of the affected customers pay the late fee, and the owner does not think it is worth his while to try to collect from the other half. The remaining sales are uncollectible. d.      Inventory purchases average 60 percent of a month’s total sales. Of those pur- chases, 40 percent are paid for in the month of purchase. The remaining 60 per- cent are paid for in the following month. e.       Salaries and wages total $8,700 a month, including a $4,500 salary paid to the owner. f.       Rent is $1,200 per month. g.       Taxes to be paid in June are $5,500. The owner also tells you that he expects cash sales of $20,000 and credit sales of $30,000 for June. There is no minimum cash balance required. The owner of the company does not have access to short-term loans. Required 1.    Prepare a cash budget for June. Include supporting schedules for cash collections and cash payments. 2.    Did the business show a negative cash balance for June? Assuming that the owner has no hope of establishing a line of credit for the business, what recom- mendations would you give the owner for dealing with a negative cash balance? View less » Jan 06 2016 01:06 PM

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