Problem 1 In preparation for the quarterly cash budget, the firm had sales of $3,000,000 in August, and S4,500,000 in September. Forecast sales for October, November and December are $1,000,000 and $1,500,000 and $2,000,000 respectively. The firm has a beginning cash balance in October of $100,000 and maintains a minimum cash balance of $200,000. Prepare and evaluate a cash budget for the months of October, November, and December based on the following assumptions. . The firm collects 60 percent of sales for cash and 40 percent of its sales one month later. Interest income of $50,000 will be received in December. . The firm has purchases of $3,500,000 in August, 2,000,000 in September, $500,000 in October, $750,000 in November, and $1,000,000 in December. The firm pays cash for 40 percent of its purchases. The firm pays for 60 percent of its purchases the following month. Salaries and wages amount to 15 percent of the previous month's sales. Sales commissions amount to 2 percent of the previous month's sales. Rent payments of $100,000 must be made each month. A principal and interest payment on an outstanding loan is due in December of $150,000. The firm pays dividends of $50,000 at the end of the quarter. . Fixed assets costing $600,000 will be purchased in December Depreciation expense each month of $45,000