Pillows Inc makes decorative throw pillows for home use. The following information was taken from the Pillows Inc. sales budget (click the icon to view the first quarter sales budget) Assume the following additional information was gathered about the types of sales made in the fourth quarter (October through December of the previous year ID (Click the icon to viow the fourth quarter sales budget) The following information was taken from tho Pillows in direct materials budget (Cick the icon to view information from the direct materials budget) Read the requirements Requirement 1. Prepare the cash collections budget for January February, and March, as well as the summary for the first quarter Pillows Inc Cash Collections Budget For the Quarter Ended March 31 Pillows Inc. Sales Budget: Type of Sale For the Quarter Ended March 31 Type of Sale: 1st Quarter Cash sales (10%) Credit sales (90%) January $221,000 1.989,000 February $272.000 2,448,000 $2.720,000 March $280 500 2.524,500 $773,500 $6,961,500 $2,210,000 $2 805 000 $7.735.000 Total sales revenue The company's collection history indicates that 75% of credit sales is collected in the month after the sale, 15% is collected two months after the sale 8% is collected three months after the sale, and the remaining 2% is never collected Pillows Inc. Sales Budget: Type of Sale For the Quarter Ended December 31 Type of Sale: 4th Quarter Cash sales (10%) S October 142,800 $ 1,285,200 November 137 200 $ 1,360,800 December 137 200 $ 1,234,800 $ 417 200 3.880,800 Credit sales (90%) $ 1,428,000 $ 1,372,000 $ 1.372.000 $ 4,172,000 Total sales revenue Pillows Inc. Excerpt from Direct Materials Budget For the Quarter Ended March 31 January February March 1st Quarter $ 1,206,704 $ 1.421,640 $ 1,520,496 $ 4.148,840 Total cost of DM purchases Assume that the total cost of direct matonals purchases in December was $725,000. The company pays 40% of its direct materials purchases in the month of purchase, and pays the remaining 60% in the month after purchase Requirement 1. Prepare the cash collections budget for January February, and March, as well as the summary for the first quarter Pillows Inc. Cash Collections Budget For the Quarter Ended March 31 January February March 1st Quarter Cash sales Collections on credit sales 75% of credit sales made last month 15% of credit sales made two months ago 8% of credit sales made three months ago Total cash collections