Francis and Company has planned a cash budget for the third quarter of 2004. The cash balance on July 1, 2004 is expected to be an overdraft of $82,000. Extracts from the sales and purchases budgets are as follows: Budgeted Sales Budgeted Purchases Month May $800,000 $900,000 $750,000 $650,000 $800,000 $600,000 $550,000 $450,000 $500,000 June July August September i) All sales are on credit and an analysis of the records shows that debtors settle according to the following pattern, in accordance with the credit terms 5/30, n90: 50% in the month of sale 30% in the month following sale 20% the following month All purchases are on credit and past experience shows that 80% are settled in the month of purchase in order to take advantage of a 10% prompt settlement discount. The balance will be disbursed in the month after purchase. The credit terms of the suppliers - 10/30, n60. ii) Wages and salaries are expected to be $1,800,000 per annum and are paid monthly. ii) Fixed operating expenses, which accrue evenly throughout the year, are estimated to be $2,400,000 per annum, (including depreciation on fixed assets of $60,000 per month) and is settled monthly. iv) v) Taxation of $80,000 has to be settled in August. The company is expected to receive settlement on an insurance claim of $50,000 in September. vi) vii) Interest on investment in other companies of $25,000 is expected in July 2004. viii) A short-term investment in JMMB Ltd. of $80,000 will be liquidated in September 2004. ix) The business has made arrangements with their bankers for a loan of $250,000. The loan will be disbursed in two tranches: July 1, 2004 November 1, 2004 $150,000 $100,000 Required: Prepare a schedule of expected cash collections for sales for each of the months July to September. Prepare a schedule of expected cash disbursements for purchases for the quarter to September 30, 2004. Prepare a cash budget, with a total column, for the quarter ending September 30, 2004, showing the expected receipts and payments for each month. (a) (b) (c)