ONE Assignment 4: Cash Budget (Module 3, Ch. 7) (i) Elon Co.'s September balance sheet contains the followinn information: Management has designated $55,500 as the firm's minimum monthly cash balance. Other information about the firm and its operations is as follows: a. Sales revenues of $530,000,$630,000, and $467,500 are expected for October, November, and December, respectively. All goods are sold on account. b. The collection pattern for accounts recelvable is 60% in the month of sale, 39% in the month following the month of sale, and 1% uncollectible, which is set up as an allowance. c. Cost of goods sold is 60% of sales revenues d. Management's target ending balance of merchandise inventory is 10% of the current month's budgeted cost of goods sold. e. All accounts payable for inventory are pald in the month of purchase f. Other monthly expenses are $70,750, which includes $5,000 of depreclation and 3,000 of bad debt expense. 9. In the event of a shortfall, the company borrows money. In contrast, in the event of excess cash, the company invests in short-term Investments. Borrowings and investments are assumed to be made at the end of a month in increments of $9,050. h. Interest on borrowings is 10% per year, payable every quarter, on the accumulated amount of the loan; similarly, Interest earned on Investments is 8% per year on the accumulated investments and is recelved every quarter. Investments can be matured and the principal amount redeemed in June or December of a year. Required: 1. Prepare a merchandise purchases budget for October and November 2 Prepare the cash budgets for October and November, Including the effects of financing (borrowing or investing). Interest is earned or paid quarterly. (Any "Repayments" and "Interest" should be Indlcated by a minus sign. Leave no cells blank - be certain to enter " 0 " wherever required.)