Cash Accounts receivable. Allowance for doubtful accounts Merchandise inventory $ 37,500 (de) 126,000 (de) 2,800 (cr) 26,250 (de) Management has designated $37,500 as the firm's minimum monthly cash balance. Other information about the firm and its operations is as follows: a. Sales revenues of $350,000, $420,000, and $312.500 are expected for October, November, and December, respectively. All goods are sold on account. b. The collection pattern for accounts receivable is 60% in the month of sale. 39% in the month following the month of sale, and 1% uncollectible, which is set up as an allowance. c. Cost of goods sold is 60% of sales revenues. d. Management's target ending balance of merchandise Inventory is 10% of the current month's budgeted cost of goods sold. e. All accounts payable for inventory are paid in the month of purchase. 1. Other monthly expenses are $49,250, which includes $3,500 of depreciation and $2.000 of bad debt expense. g. In the event of a shortfall, the company borrows money. In contrast, in the event of excess cash, the company invests in short-term investments. Borrowings and investments are assumed to be made at the end of a month in Increments of $6,250, h. Interest on borrowings is 10% per year, payable every quarter, on the accumulated amount of the loan similarly, Interest earned on investments is 8% per year on the accumulated investments and is received every quarter. Investments can be matured and the principal amount redeemed in June or December of a year. 2. Prepare the cash budgets for October and November, including the effects of financing (borrowing or investing). Interest is earned or paid quarterly. (Any "Repayments" and "Interest" should be indicated by a minus sign. Leave no cells blank-be certain to enter "O" wherever required.) Cash balance, beginning Add Collections from sales Total cash available Deduct Disbursements Purchases for inventory Monthly expenses Total disbursements Excess (deficiency) of cash Financing investments Borrowings Repayments Interest Total financing Kat Ltd. Cash Budget October November 0