Todd Enterprises Is Preparing a Cash Budget for the Second

Todd Enterprises is preparing a cash budget for the second quarter of the coming year.The following data have been forecasted:

Additional data:
(1)Sales are 40% cash and 60% credit.The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter.Total sales in March were $125,000.
(2)Purchases are all on credit,with 40% paid in the month of purchase and 60% paid in the following month.
(3)Operating expenses are paid in the month they are incurred.
(4)A minimum cash balance of $25,000 is required at the end of each month.
(5)Loans are used to maintain the minimum cash balance.At the end of each month,interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month.Repayments are made at the end of the month if the cash balance exceeds $25,000.
Prepare the company's cash budget for May.Show the ending loan balance at May 31.

Correct Answer:

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