A company sells cars. The data following data are taken from a statement of financial position at March 31, 2019

Cash $6000

Accounts Receivable $18000

Inventories $34000

Accounts payable $19750

Additional info:

1) Actual and expected sales are:

March (Actual) $40000

April $50000

May $62000

June $80000

2) 30% of sales are on credit, the remaining are in cash. All credit sales are collected in the following month.

3) The ending inventory should be 70% of the following month's sales cost of goods sold.

4) Gross margin is expected to be 20% of sales

5) Of each month's purchases, 40% are paid in cash, and the remaining is paid for in the month following purchase,

6) Monthly operating expenses are: salaries in commissions, 10% of sales; rent, $2000 and other expenses, excluding depreciation equipment, equal to 8% of sales. All paid in the month where they are incurred. Monthly depreciation equipment is $800.

7) Equipment will be purchased in April $1500 in cash

8) The company has a policy that the ending cash balance in each month must be at least $3500. The company can borrow at the beginning of each month. All repayments are made at the end of the month. All borrowings and repayments are made in increments of $100. The interest rate on borrowings is 5% per year with interest being paid in the month of borrowings.

Question: Prepare the following budget

	April	May
Cash balance beginning
Cash collection from sales
Total
Disbursements:
Purchases
Operating expenses
Equipment
Total disbursements:
Surplus or deficit of cash
Borrowings or repayments
Interests
Cash balance

Could anyone give an explanation on how to do the budget step by step?