O'Brien Company Has the Following Information O'Brien Company Wants to Maintain a Minimum Cash Balance of June

question 95

Essay

O'Brien Company has the following information:
$\begin{array}{ll}\text { Cash Balance, June } 30 & \$ 50,000 \\\text { Dividends paid in July } & 60,000 \\\text { Cash paid for operating expenses in July } & 185,500 \\\text { Depreciation expense in July } & 12,000 \\\text { Cash collections on sales in July } & 510,000 \\\text { Merchandise purchases paid in July } & 180,000 \\\text { Purchase equipment for cash in July } & 94,500\end{array}$
O'Brien Company wants to maintain a minimum cash balance of $50,000.Assume that borrowing occurs at the beginning of the month and repayments occur at the end of the month.Interest of 1% per month is paid in cash at the end of each month debt is outstanding.Borrowing and repayment is carried out in multiples of $1,000.
Required:
Prepare a cash budget for July.

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Definitions:

Expected Sales

Forecasted or projected revenue figures estimated from future sales over a specific period.

Flexible Budgeting

A budgeting process that allows for adjustments to budgetary allocations based on changes in actual performance, revenue, or other factors.

Sales Budget

A financial plan that estimates the revenues expected from sales over a future period.

Production Budget

An estimate of all costs associated with manufacturing a product for a set period.