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One-more Coffee Co. (OCC) is in the process of preparing the budget for the third quarter of 2012. The following data has been gathered:

One-more Coffee Co. (OCC) is in the process of preparing the budget for the third quarter of 2012. The following data has been gathered:

 Account balances as of June 30

Cash $ 20,000
Accounts receivable 15,000
Inventory 47,250
Building and Equipment 200,000
Accounts payable -0-

 Recent and forecasted sales

May (actual sales) $ 75,000
June (actual sales) 80,000
July (budgeted sales) 82,000
August (budgeted) 90,000
September (budgeted) 100,000
October (budgeted) 112,000

 Sales are 75% cash and 25% on credit. Credit amounts are all collected within the month after sale.

 OCC’s gross margin averages 40% of revenues.

 Operating expenses – all are paid before the end of the month.

Salaries and wages $8,000 per month plus 5% of revenue as commissions
Rent and property taxes $1,000 per month
Other operating expenses 2% of revenues
Depreciation $1,000 per month

 OCC has no minimum inventory requirement. Their policy is to purchase on the 15th of each month the amount needed for the next month’s expected sales.

 OCC Is negotiating the purchase of new equipment that will cost $127,000 and be installed in September. Terms are 50% to be paid in August and the rest in September.

 The minimum cash balance required is $20,000. If needed, cash is borrowed as of the beginning of the month and all repayments are made when possible at the end of the month. The interest rate charged on these short-term borrowings is 12% per year, payable at the end of the month. Both borrowings and repayments are made in multiples of $1,000. Management does not want to borrow more cash than is necessary for operations.

a. Prepare the following schedules and budgets:

• Cash Receipts
• Cash Disbursements for Purchases
• Cash Disbursements for operating expenses
• Cash Budget (with budgeted financing)
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