A firm has a contract and is able to acquire a wide variety of books at a fixed price. At the end of 2000, the firm reported the following balance sheet:

Cash	14,200
Account receivable	252,000
inventory	21,000
equipment (net)	220,000
account payable	350,000
loan payable	20,000
common shares	50,000
retained earnings	75,750

The firm prepares rolling budgets for the upcoming three months. Information for the budget for the first quarter of 2001:

The firm predicted unit sales for January, February, March and April of 3,500, 5,500, 4,500 and 5,200 respectively.

The firm has a policy of keeping inventory on hand of 20% of the following months sales.

The firm maintains a minimum balance in the cash account of $19,500.

80% of all sales are on account. Of the sales on account, 30% are collected in the month of the sale, 40% are collected in the following month and 25% are collected in the month after that.

The cost per unit is $50.

In addition to product cost, the firm incurs commissions of 5% of sales, depreciation on equipment of 8,400 per month, administrative costs of 3% of sales, rent of $85,000 per month and insurance of $25,000 per month.

All purchases are on account. 40% of purchases are paid for in the month following the purchase and the remaining 60% are paid for two months after the purchase.

Actual sales for the month of November were 8,000 units and actual sales for December were 3,000 units. Actual purchases in November were $300,000 and actual purchases in December were $100,000.

The price per unit is $100

The firm can borrow money from the bank at any time. The loan carries an interest rate of 3% (per year). Any borrowing must take place at the beginning of the month in which the funds will be required. Any repayments must take place at the end of the month in which they will become possible. Interest must be paid each month on the amount outstanding as of the end of the prior month.

With detailed calculations of how each have been calculated/obtained:

1. Prepare a sales budget (proper format).
2. Prepare a purchases budget (proper format)
3. Prepare a cash collections budget (proper format)
4. Prepare a cash disbursements budget (proper format)
5. Prepare a cash budget (proper format)