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Direct Equipment Projected Revenues & Expenses June July August September October November Sales Cost of Goods Sold Gross Profit 85,000 86,275 87,569 88,883 90,216

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Direct Equipment Projected Revenues & Expenses June July August September October November Sales Cost of Goods Sold Gross Profit 85,000 86,275 87,569 88,883 90,216 91,569 52,700 53,491 54,293 55,107 55,934 56,773 32,300 32,785 33,276 33,775 34,282 34,796 Admin & Selling Costs 21,000 21,000 21,000 21,000 21,000 21,000 Net Income before Taxes 11,300 11,785 12,276 12,775 13,282 13,796 Information related to cash receipts 1) Cash sales are 80% and credit sales are 20% per month 2) Collections on credit sales are 60% in the month of sale and 40% in the following month Information related to purchases of direct materials 1) Purchases of Direct Materials are 32% of Sales 2) Direct material purchases are paid 50% in current month and 50% in following month 3) Ending Inventory needs to be 30% of the following month's Direct Materials Cost of Goods Sold 4) Accounts payable for purchases of direct materials June 30 was $13,600 Information related to cash 1) Beginning Cash Balance June 30 was $175,000 2) Admin & Selling Costs include $1,000 depreciation expense 3) Admin & Sales salaries are $4,350 per month (included in total Admin and Selling Costs) 4) Direct wages are 30% of sales 5) Wages are paid 80% in current month and 20% the following month 6) A dividend to the owners of 10% of the ending quarter's Net Income (after tax) is paid in Jan, Apr, Jul, Oct 7) April-June Net Income before taxes was $50,000 8) Quarterly estimated taxes are paid the month following the end of the quarter 9) Effective tax rate is 23%. 10) Direct Equipment operates on a calendar year basis Required - Prepare the following budgets for July - October 3) Cash disbursements for purchases of Direct Materials (use results of Production budget)

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