Assume that sales and expenses forecasts for months April, May, June, and July are as follows.
20% of all sales in a month are paid in the same month, 60% are paid in the next month, and 20% are paid in the second month after. All expenses in a month are paid in the same month. There is a $20,000,000 minimum required cash balance at the end of each month, and any shortage from this minimum requirement will be covered by obtaining a loan.Any excess over $20,000,000 will be used to reduce or pay off cumulative loan.I nitial cash balance in June is $6,000,000 and there is no cumulative loan at this time. Monthly prorated tax rate is 2%, and monthly interest rate on cumulative loan is 1%.
Requirements:
1. Prepare cash budget proforma for months June and July.
Provide in-text citations and references, and explain your work in detail.
Extracted text: Month Sales Expenses $40,000,000 $35,000,000 $50,000,000 $60,000,000 $25,000,000 $20,000,000 $30,000,000 $35,000,000 April May June July