At the end of June 2015, Mechanical Supplies Ltd had a credit balance at the bank amounting to $640,000. The company considers cash budgeting to be an integral part of planning to meet its financial demands. The following information was extracted from the companys records during 2015:

(1) The following table provides information on budgeted purchases for the periods indicated:

Budgeted Purchases

2015	$
April	540,000
May	750,000
June	620,000
July	900,000
August	800,000
September	1,000,000
October	700,000
November	650,000
December	850,000

The companys records revealed that 50% of the companys purchases were for cash and 50% was paid for two months after purchase.

(2) In May 2015, the company purchased a machine on credit for $3,500,000. The deal required a $1,000,000 down payment and the balance to be paid off in equal amounts over the next five months.

(3) In August 2015, the company sold two of its motor vehicles to staff members. Proceeds from the sale amounted to $675,000.

(4) Taxation for the second quarter of 2015, amounting to $746,000 was to be paid in the first month of the third quarter.

(5) In January 2015 an accident caused the write-off of a motor vehicle resulting in the awarding of $2,500,000 from the claim made by the company. The money was to be received in three truancies as follows: May $500,000; July $1,000,000; and September $1,000,000.

(6) The company received rental income of $1,200,000 per annum from sub-let of office space on its premises.

(7) Sundry expenses amounted to $75,000 per month, while insurance of $600,000 per annum was paid in equal amounts at the end of each quarter.

(8) Bad debts of $440,000 written off in 2014 was recovered in August 2015, while $550,000 was invested in securities at Jamaica Investments Ltd in July 2015.

(9) Other operating expenses were budgeted to be $700,000 per month. Depreciation which was included in the operating expenses figures was estimated at $1,500,000 for the year.

(10) In September 2015 the company collected $3,000,000 from an investment in shares on the stock market. It also planned to pay dividends amounting to $680,000 to its shareholders in that same month.

(11) The following table provides information on budgeted sales for the periods indicated:

Budgeted Sales

2015	$
April	690,000
May	1,200,000
June	800,000
July	1,000,000
August	1,300,000
September	1,250,000
October	950,000
November	1,500,000
December	1,400,000

Records from the companys books revealed that 60% of sales are for cash; 25% is received one month later; and the balance received the month after.

(12) Short term financial support was available from Helpful Bank Ltd if the need arose. The interest rate on borrowings was 24% per annum on the principal amounts that are paid back. The company was allowed to borrow at the beginning of the month and to pay back at the end of the month in multiples of $50,000. no more cash than was needed was allowed to be borrowed and repayments were to be done promptly as long as there was sufficient cash to do so.

Required:

(a) A cash collection summary from sales showing cash and credit collections separately for the fourth quarter of 2015. (5 marks)

(b) A payment summary for purchases showing cash purchases and credit purchases separately for the fourth quarter of 2015. (5 marks)

(c) A cash budget for the fourth quarter of 2015. Clearly show amounts for cash sales, credit sales, cash purchases, credit purchases and totals. (30 marks)