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Lone Star Corporation supplies electronic equipment to industry. Data regarding the store's operations follow: a. Sales are budgeted at $320,000 for November, $340,000 for December,

Lone Star Corporation supplies electronic equipment to industry. Data regarding the store's operations follow: a. Sales are budgeted at $320,000 for November, $340,000 for December, and $330,000 for January. b. Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible. c. The cost of goods sold is 60% of sales. d. The company desires ending merchandise inventory to equal 70% of the following month's cost of goods sold. Payment for merchandise is made 60% in the month of purchase and 40% in the month following the purchase. e. Other monthly expenses to be paid is $55,000, which includes $5,000 for depreciation. f. The company plans to issue additional common stock for $60,000 on December 1. g. The company will buy machinery in November for $50,000.

h. Due to an agreement with a supplier, the company must maintain a minimum balance of $10,000 cash monthly. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a loan balance of $40,000, at 1% interest monthly(not compounded). Outstanding bank loans plus accumulated interest should be repaid at the end of each calendar quarter, where possible.

i. The company paid dividend of $20,000 at end of December. Required: a. Prepare a Schedule of Expected Cash Collections for November and December. b. Prepare a Merchandise Purchases Budget for November and December. c. Prepare Cash Budgets for November and December.

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