Prepare the cash payments budget for the second quarter

Crane Products, a rapidly growing distributor Of home gardening equipment, is formulating its plans for the coming year. Robert Williams, the firm's marketing director, has completed the following sales forecast. Month January February March April May June Sales $900,000 $900,000 $850,000 $950,000 Month July August September October November December Sales $1,310,000 $1,600,000 $1,500,000 John Johnson, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information. All sales are made on credit. Crane's excellent record in accounts receivable collection is expected to continue, with 30% of billings collected in the month of sale, 60% of billings collected in the month after sale and the remaining 10% collected two months after the sale. Cost of goods sold, Crane's largest expense, is estimated to equal 45% of sales dollars. Forty percent of inventory is purchased one month prior to sale and 60% during the month of sale. For example, in April, 60% of April cost of goods sold is purchased and 40% of May cost of goods sold is purchased. All purchases are made on account. Historically, 75% Of accounts payable have been paid during the month Of purchase, and the remaining 25% in the month following purchase. Hourly wages and fringe benefits, estimated at 30% of the current month's sales, are paid in the month incurred.