Prepare the Cash Budget for the third quarter.

Best Frames Ltd is a worldwide musical part manufacturing firm based in North America. After many years in the market, the Peterborough division, which produces one product called "Best Frames Stand," reached a spike in sales level. The Management wants to have a significant investment to expand the facility and increase production, but it is requesting that the division prepare a budget for the third quarter of 2023. 1. From previous experience, Management has determined that finished goods ending inventory equal to 25% of the next month's unit sales are required to fit the buyer's demands. 2. The Best Frames Stand requires one type of raw material: Plastic. - Each Best Frames Stand requires 1.6 kilograms of Plastic at the cost of $1.75 per kilogram. - The supplier of Plastic tends to be somewhat erratic, so Best Frames Ltd finds it necessary to maintain an inventory balance equal to 20% of the material needed for the next month as a precaution against stock-outs. The direct material on June 30 is 43,600 Kg. 3. The beginning accounts payable will consist of $193,620. 4. Best Frames Ltd pays for 60% of a month's purchases in the month of purchase and 40% in the following month. 5. The manufacturing overhead is based on direct labour hours. The workers receive an average of $18.00 per hour, including employee benefits. Each Best Frames Stand takes 15 minutes to complete. 6. Best Frames Ltd allocates the manufacturing overhead based on direct labour hours; The variable manufacturing overhead is as follows: Maintenance $0.40; Utilities $0.60; Indirect Labor $0.60; Indirect materials $0.40 7. The Monthly Fixed manufacturing overhead costs are as follows: 8. Best Frames Ltd allocates the selling and administration expenses based on unit sales; The variable selling and administration rate is $1.5 per unit of sales. o The MAanthle, Colline and sdminietrative ounonese sra. 10. Sales are on account (credit); 60% of the sales are collected during the month of sales and 40% the following month. This was the same collection pattern as in previous years. 11. In August, $500,000 of new equipment to update operations will be purchased with cash. In addition, at the end of each quarter, the company pays $250,000 in dividends. 12. Three months' insurance is prepaid on the first day of the first month of the quarter. At the beginning of each quarter, the company pays $8,850. Property taxes are paid at the beginning of each quarter. 13. The company wants to maintain at the end of each month a minimum bank balance of $500,000. In case the company has a deficiency of money or is not able to reach this minimum bank balance, the company can borrow from a line of credit at the rate 12% per annum. All borrowing is considered to happen on the first day of the month, and repayments are on the last day of the month. All borrowings and repayments from the bank should be in multiples of $5,000. It pays interest monthly. The cash balance on June 30 is $184,000. 14. The company has a Common Stock beginning balance of $135,858 and the Retained Earnings Beginning Balance $685,000 a) Prepare the income statement (illustration 10.15) b) Prepare the statement of financial position (Illustration 10.21)