Current Year: Fourth quarter actual Next year: First quarter estimated Sales $ 200,000 Merchandise Purchases $ 126,000 $186,000 $ 300,000 Second quarter estimated Third quarter estimated $ 400,000 $ 500,000 $ 200,000 $ 126,000 $ 246,000 $305,000 Fourth quarter estimated b. All sales are on account. The company normally collects 65% of a quarter's sales before the quarter ends and another 33% in the following quarter. The remainder is uncollectible. This pattern of collections is now being experienced in the current year's fourth- quarter actual data. c. Eighty percent of a quarter's merchandise purchases are paid for within the quarter. The remainder is paid for in the following quarter. d. Selling and administrative expenses for next year are budgeted at $50,000 per quarter plus 15% of sales. Of the fixed amount, $20,000 each quarter is depreciation. e. The company will pay $10,000 in dividends each quarter. f. Land purchases of $75,000 will be made in the second quarter, and purchases of $48,000 will be made in the third quarter. These purchases will be for cash. g. The Cash account contained $10,000 at the end of the current year. The treasurer feels that this represents a minimum balance that must be maintained. h. The company's bank allows borrowing in increments of $1,000 at the beginning of each quarter, up to a total loan balance of $100,000. The Interest rate on these loans is 2.5% per quarter and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the year. 1. At present, the company has no loans outstanding. Required: 1. Calculate the expected cash collections by quarter and in total for next year. 2. Calculate the expected cash disbursements for merchandise purchases by quarter and in total for next year. 3. Calculate the expected cash disbursements for selling and administrative expenses, by quarter and in total for next year. 4. Prepare a cash budget by quarter and in total for next year. Req 1 and 2 Required 3 Required 4 1. Calculate the expected cash collections by quarter and in total for next year. 2. Calculate the expected cash disbursements for merchandise purchases by quarter and in total for next year. Total cash collections Total cash disbursements First Second Third Fourth Total Req 1 and 2 Required 3 Required 4 Calculate the expected cash disbursements for selling and administrative expenses, by quarter and in total for next year. Third Fourth Year First Second Budgeted cash disbursements for selling and administrative expenses Prepare a cash budget by quarter and in total for next year. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Westex Products Cash Budget Quarter First Second Third Fourth Year Beginning cash balance $ 10,000 $ 12,000 $ 10,000 Add collections from customers 261,000 359,000 457,000 295,000 1,372,000 Total cash available 271,000 371,000 467,000 295,000 1,372,000 Less disbursements: Merchandise purchases 174,000 234,000 449,200 260,000 1,117,200 Selling and administrative expenses 75,000 90,000 105,000 60,000 330,000 Dividends 10,000 10,000 10,000 10,000 40,000 Land 75,000 48,000 123,000 Total cash disbursements 259,000 409,000 612,200 330,000 1,610,200 Excess (deficiency) of cash available over disbursements 12,000 (38,000) (145,200) (35,000) (238,200) Financing: Borrowings 48,000 52,000 Repayments Interest Total financing Ending cash balance 1,200 0 48,000 $ 12.000 $ 53,200 2,500 2,500 10,000 $ (92,000) $ (32,500) $ (238,200)