Mary and Kay, Inc., a distributor of cosmetics throughout Florida, is in the process of assembling a cash budget for the first quarter of 20x1. The following information has been extracted from the companys accounting records:

• All sales are on account. Sixty percent of customer accounts are collected in the month of sale; 35 percent are collected in the following month. Uncollectibles amounting to 5 percent of sales are anticipated, and management believes that only 20 percent of the accounts outstanding on December 31, 20x0, will be recovered and that the recovery will be in January 20x1.

• Sixty percent of the merchandise purchases are paid for in the month of purchase; the remaining 40 percent are paid for in the month after acquisition.

• The December 31, 20x0, balance sheet disclosed the following selected figures: cash, $85,000; accounts receivable, $265,000; and accounts payable, $86,000.

• Mary and Kay, Inc. maintains a $85,000 minimum cash balance at all times. Financing is available (and retired) in $1,000 multiples at an 9 percent interest rate, with borrowings taking place at the beginning of the month and repayments occurring at the end of the month. Interest is paid at the time of repaying principal and computed on the portion of principal repaid at that time.

• Additional data:

	January			February			March
Sales revenue	$	650,000		$	740,000		$	755,000
Merchandise purchases		470,000			500,000			620,000
Cash operating costs		113,000			92,000			155,000
Proceeds from sale of equipment								35,000

Required:

1. Prepare a schedule that discloses the firms total cash collections for January through March.

	January	February	March
Collection of accounts receivable
Collection of January sales
Collection of February sales
Collection of March sales
Sale of equipment
Total cash collections

2. Prepare a schedule that discloses the firms total cash disbursements for January through March.

	January	February	March
Payment of accounts payable
Payment of January purchases
Payment of February purchases
Payment of March purchases
Cash operating costs
Total cash disbursements

3. Prepare a schedule that summarizes the firms financing cash flows for January through March.

	January	February	March
Beginning cash balance
Total receipts
Subtotal
Less: Total disbursements
Cash excess (deficiency) before financing
Financing:
Borrowing to maintain $85,000 balance
Loan principal repaid
Loan interest paid
Ending cash balance