31. Budgets for Cash Collections from Sales and Cash Payments for Purchases. Specialty Products, Inc., produces fire retardant tarps. The dollar amount of the company's quarterly sales and direct materials purchases are projected to be as follows (this information is derived from the previous exercises): 1st 2nd 3rd 4th Sales $ 2,340,000 $ 3,900,000 $ 4,680,000 $ 3,120,000 Direct materials $ 289,952 $ 433,056 $ 464,224 $ 362,272 purchases Assume all sales are made on credit. The company expects to collect 80 percent of sales in the quarter of sale and 20 percent the quarter following the sale. Accounts receivable at the end of last year totaled $400,000, all of which will be collected in the first quarter of the coming year. Assume all direct materials purchases are on credit. The company expects to pay 90 percent of purchases in the quarter of purchase and 10 percent the following quarter. Accounts payable at the end of last year totaled $30,000, all of which will be paid in the first quarter of this coming year. Required: a. Prepare a budget for cash collections from sales for Specialty Products, Inc. Use a format similar to the top section of Figure 9.5. b. Prepare a budget for cash payments for purchases of materials for Specialty Products, Inc. Use a format similar to the middle section of Figure 9.5. Round to the nearest dollar. 31. Sales Cash Collections and Purchases Cash Payments Budgets a. Sales cash collections budget Specialty Products, Inc. Cash Budget Year Ending December 31 Quarter 2 Year Year data is: $ 400,000 1,872,000 2,340,000 Cash collections from sales 4th quarter prior year (given) 1st quarter 2nd quarter 3rd quarter 4th quarter Total cash collections Incorrect Correct Incorrect Incorrect Incorrect Incorrect $2,272,000 Correct Incorrect Incorrect Incorrect b. Purchases cash payments budget Specialty Products, Inc. Cash Budget Year Ending December 31 Quarter 2 3 4 Year 1 Cash payments for purchases of materials 4th quarter prior year (given) ($ 30,000) 1st quarter (260,957) 2nd quarter 3rd quarter ( 289,952) Incorrect Correct Incorrect Incorrect Incorrect 4th quarter Total cash payments for purchases ($290,957) Incorrect Correct Incorrect Incorrect Incorrect