GrowMaster Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firms marketing director, has completed the following sales forecast.

Month		Sales		Month		Sales
January		$907,500		July		$1,507,500
February		$1,004,000		August		$1,507,500
March		$907,500		September		$1,609,100
April		$1,158,500		October		$1,609,100
May		$1,251,000		November		$1,507,500
June		$1,400,500		December		$1,703,300

All sales are made on credit.

GrowMasters excellent record in accounts receivable collection is expected to continue, with 60 percent of billings collected in the month after sale and the remaining 40 percent collected two months after the sale.

Cost of goods sold, GrowMasters largest expense is estimated to equal 40 percent of sales dollars. Seventy percent of inventory is purchased one month prior to sale and 30 percent during the month of sale. For example, in April 30 percent of April cost of goods sold is purchased and 70 percent of May cost of goods sold is purchased.

All purchases are made on account. Historically, 75 percent of accounts payable have been paid during the month of purchase, and the remaining 25 percent in the month following purchase.

Hourly wages and fringe benefits, estimated at 30 percent of the current months sales, are paid in the month incurred.

General and administrative expenses are projected to be $1,566,800 for the year. A breakdown of the expenses follows. All expenditures are paid monthly throughout the year, with the exception of property taxes, which are paid in four equal installments at the end of each quarter.

Salaries and fringe benefits $322,400

Advertising 375, 800

Property taxes 136, 800

Insurance 197, 600

Utilities 184, 300

Depreciation 349, 900

Total $1,566,800

Operating income for the first quarter of the coming year is projected to be $324,300. GrowMaster is subject to a 40 percent tax rate. The company pays 100 percent of its estimated taxes in the month following the end of each quarter.

GrowMaster maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at the end of the month, the company borrows against its 12 percent line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $57,700.

Prepare the purchases budget for the second quarter.

Prepare the cash payments budget for the second quarter.

Prepare the cash budget for the second quarter.