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Note: This is an individual assignment, not a group project. Due Fri. 10/3.
3-8 Cash Budget - MODIFIED IN SEVERAL WAYS FOR EXCEL ASSIGNMENT
This is Problem 3-8 in the textbook, pg. 126, for Grenoble Enterprises.
You will do the cash receipts, disbursements, and budget in Excel and
report on the changed situation. Turn in two printouts: values and cell formulas.
Use cell formulas to add up (SUM) the cash receipts and disbursements and calculate net
cash flow, ending cash, future months' beginning cash, and required total financing or
excess cash balance.
Grenoble Enterprises had sales of $50,000 in March and $60,000 in April. Forecast sales for May, June
and July are $75,000, $87,000, and $110,000, respectively. The firm has a cash balance of $5,000 on
May 1 and wishes to maintain a minimum cash balance of $5000.
Given the following data, prepare and interpret a cash budget for the months of May, June, and July.

1 The firm makes 10% of sales for cash; 50 % are collected in the next month,
and the remaining 40% are collected in the second month following the sale.

2 The firm receives other income of $2,000 per month.

3 The firm's actual or expected purchases, all made for cash, are $54,000,
$62,000, and $78,500 for the months of May through July, respectively.

4 Rent is $3,000 per month.

5 Wages and salaries are 10% of the previous month's sales.

6 Cash dividends of $3,000 will be paid in June.

7 Payment of principal and interest of $4,000 is due in June.

8 A cash purchase of equipment costing $6,000 is scheduled in July.

9 Taxes of $6,000 are due in June.

PUT YOUR CELL FORMULAS IN THE ROWS BELOW. ANSWER THE QUESTIONS
STARTING IN ROW 72.
Answer:
CASH RECEIPTS SCHEDULE:
March April May June July
Sales receipts $50,000 ? ? ? ?
Percentages: delete #s
Cash Sales $0 $0 $0 $0 $0
Lag 1 mo. $0 $0 $0 $0
Lag 2 mo. $0 $0 $0
Other income $0 $0 $0
Total cash receipts

CASH DISBURSEMENTS SCHEDULE: May June July

Disbursements:
Purchases $ 54,000 ? ?
Rent ? ? ?
Wages & salaries ? ? ?
Dividends ? ? ?
Principal & Interest ? ? ?
Purchase of new equipment ? ? ?
Taxes due ? ? ?
Total cash disbursements

CASH BUDGET: May June July

Total cash receipts ? ? ?

Total cash disbursements ? ? ?
Net cash flow ? ? ?
Add: Beginning cash ? ? ?
Ending cash ? ? ?
Minimum cash ? ? ?
Required total financing

Excess cash balance

a. How much of a credit line should the firm establish? ________________________

(use rule of thumb taught in class)

b. Tell what actions the cash manager would take for each month with respect to the numbers
shown in your worksheet. For example, what amount will s/he invest in each month or
borrow in each month? Is this an additional amount borrowed or invested?
Type your answer in yellow box below.

Note: Expand the region above if necesssary to read your answer on the printout.