Prepare a cash budget for the Ace Manufacturing Company, indicating receipt and disbursement for May, June and July. The firm wishes to maintain all times a minimum cash balance of $20,000. Determine whether or not borrowing will be necessary during the period, and if it is, when and for how much. As of April 30, the firm had a balance of $20,000 in cash. Actual sale
January $50,000 February $50,000 March $60,000 April $60,000
Forecasted sale
May $70,000 June $80,000 July $100,000 August $100,000
- Account receivable: 50% of total sale are for cash in current month. The remaining 50% will be collected equally during the following two month.
- Cost of goods sold: 80% of sale. 75% of this cost is paid the following month.

- Selling, general, and administrative expense: $10,000 per month plus 10% of sale. All of these expenses are paid during the month of incurrence.
- Interest payment: A semiannual interest payment on $150,000 of bonds outstanding for a year is paid during July and December. An annual $50,000 sinking fund payment is also made in August.
- Dividend: A $10,000 dividend payment will be declare and made in July.
- Capital expenditure: $40,000 will be invested in plant and equipment in June.
- Taxes: Income tax payment of $1,000 will be made in July