First quarter

$489,000

Second quarter

294,000

Third quarter

$489,000

Fourth quarter

489,000

There are no cash sales, and the beginning balance of receivables is expected to be collected in the first quarter. Subsequent collections are two-thirds in the quarter when sales take place and one-third in the following quarter.

The company makes materials purchases valued at $401,000in the first quarter, but makes no purchases in the last three quarters. It makes payment when it purchases the materials.

Direct labour of $350,000is incurred and paid only in the first quarter. Factory overhead of $338,000is also incurred and paid in the first quarter, and is at a standby level of $100,000during the other three quarters. Selling and administrative expenses of $34,000are paid each quarter throughout the year. Big Sister has an operating line of credit with its bank at an interest rate of 5% per annum. The company plans to keep a cash balance of at least $10,000at all times, and it will borrow and repay in multiples of $5,000. It makes all borrowings at the beginning of a quarter, and makes all payments at the end of a quarter. It pays interest only on the portion of the loan that it repays in a quarter.

The company plans to purchase equipment in the second and fourth quarters for $69,000and $151,000, respectively. The cash balance on January 1 is $24,000and accounts receivable total $148,000.

Prepare cash budget for the year. Show receipts, disbursements, the ending cash balance before borrowing, the amounts borrowed and repaid, interest payments, and the ending cash balance