Problem 4

In-tech Corporation?s sales and purchases for the last threemonths are as followingIt pays 40 percent of purchases in cash and gets a 4percent discount. Another 40 percent of purchases are paidthe next month, and the final 20 percent of purchases arepaid in the second month after the purchase (for example,40 percent of October purchases are paid in October, 40percent October purchases are paid in November, and 20percent October purchases are paid in December). Half ofthe sales are made in cash, and the balance is collectedthe next month. Cash sales are given a two percentdiscount, and five percent of credit sales end up as baddebt. The monthly operating expenses for In-techCorporation?s are $10,000. In-tech expects to sell one ofits machinery in March for $25,000. It will buy thereplacement in April for $50,000. The cash balance as onDecember 31 was $50,000. In-tech has a target cash balanceof $50,000. Prepare a monthly cash budget for the nextthree months.