Problem 4

In-tech Corporation's sales and purchases for the last three

months are as following:

Sales ($)

Purchases ($)

October

100,000

80,000

November

90,000

100,000

December

120,000

75,000

For the next three months, it estimates sales and purchases

to be as following:

Sales ($)

Purchases ($)

January

90,000

70,000

February

80,000

70,000

March

80,000

70,000

It pays 40 percent of purchases in cash and gets a 4

percent discount.Another 40 percent of purchases are paid

the next month, and the final 20 percent of purchases are

paid in the second month after the purchase (for example,

40 percent of October purchases are paid in October, 40

percent October purchases are paid in November, and 20

percent October purchases are paid in December).Half of

the sales are made in cash, and the balance is collected

the next month.Cash sales are given a two percent

discount, and five percent of credit sales end up as bad

debt.The monthly operating expenses for In-tech

Corporation's are $10,000.In-tech expects to sell one of

its machinery in March for $25,000.It will buy the

replacement in April for $50,000.The cash balance as on

December 31 was $50,000.In-tech has a target cash balance

of $50,000. Create a monthly cash budget for the next

three months.