Chapter 9 Budgeting h. All sales are on account. Based on past experience, sales are expected to be collected in the following pattern 50% in the month of sale 49% nthe moth folowing sale 5% Lncolectble The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $160,000. The company maintains finished goods inventories equal to 20% of the following month's sales. The inventory of finished goods on July 1 will be 1300 units. d. Each water tube requires 3 kilograms of synthetic polyisoprene rubber compound. To prevent shortages, the company would like the inventory of synthetic rubber compound on hand at the end of each month to be equal to 20% of the following month's produc- tion needs. The inventory of sy nthetic rubber compound on hand on July 1 will be 3720 kilograms. The synthetic rubber compound costs $3.50 per kilogram. Water Sport pays for 70% of its purchases in the month of purchase the remainder is paid for in the following month. The accounts payable balance for sy nthetic rubber compound purchases will be $11400 on July 1. Required: 1. Prepare a sales budget, by month and in total, for the third quarter. (Show your budget in both units of water tubes and dollars.) Also prepare a schedule of expected cash collec tions, by month and in total, for the third quarter. 2. Prepare a production budget for each of the months July through October. 3. Prepare a direct materials purchases budget for sy nthetic rubber compound, by month and in total, for the third quarter. Also prepare a schedule of expected cash disbursements for synthetic rubber compound, by month and in total, for the third quarter