Charlie Co. has planned the following sales and purchases for the next three months:

January

February

March

Budgeted Sales

$40,000

$50,000

$70,000

Budgeted purchase of inventory

$35,500

$46,700

$95,500

Customers pay 20% of the sales in cash at the time of the transaction and 80% on account. From experience, the company has learned that a month's sales on account are collected according to the following pattern:

Month of sale

60%

First month following sale

30%

Second month following sale

8%

Uncollectible

2%

The company pays 45% of the cost of the inventory in the month of purchase, and 55% during the following month.

The company requires a minimum cash balance of $5,000 to start a month. The beginning cash balance in March is budgeted to be $6,000.

The following additional information has been provided for March:

Operating expenses

$25,000

Dividends paid in March

$4,000

The operating expenses include $5,000 depreciation. All operating expenses are paid during each month.

Required:

a. Calculate the budgeted cash collection for March.

b. Calculate the balance of accounts payable at the end of March.

c. prepare a cash budget in good form for the month of March (The company can borrow in any dollar amount and will not pay interest until April)