The management estimates total sales for the period January through June based on actual sales from the immediate past six months. The following assumptions are made: Historical Sales Forecasted Sales July, 2016 $100,000 January, 2017 $110,000 August, 2016 $125,000 February, 2017 $ 90,000 September, 2016 $105,000 March, 2017 $120,000 October, 2016 $155,000 April, 2017 $ 80,000 November, 2016 $ 60,000 May, 2017 $ 70,000 December, 2016 $ 70,000 June, 2017 $ 60,000 a. 50% of the Sales are collected immediately. 30% of the Sales will be collected one month after the sale. 10% will be collected two months after the sale. 6% will be collected three months after the sale. The remainder will be collected four months after the sale. Bad debts are insignificant. b. Purchases were $50,000 in July, 2016 and are expected to grow by 2% each month. The purchases will be paid in the same month. c. Wages and salaries of $30,000 will be paid each month. d. Depreciation expenses are $20,000 each month. e. Rent of $15,000 will be paid at the end of each calendar quarter. f. Machinery worth $150,000 will be purchased in March.
Prepare the cash budget from January to June. Determine the cash surp