Problem 4 The CEO of Zig-Zag Company is seeking to borrow money from the company's bank. The company needs this loan to assist the company in acquiring inventories. The loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months of January through March, during which the loan will be used: On January 1, the start of the loan period, the cash balance was $40,000. Accounts receivable on January I will total $140,000, of which $120,000 will be collected in January and $20,000 will be collected in February. a. Past experience shows that 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 10% in the second month following sale. Budgeted sales and expenses for the three-month period follow b. Month Sales (all on account) Merchandise purchases Payroll Equipment purchases January February March 300,000 400,000 250,000 210.000 160,000 130,000 102,000 102,000 90,000 65,000 c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during December last year, which will be paid in January, total $140,000. d. The treasurer feels that the Cash account balance of $40,000 at the end of the previous year represents the minimum monthly balance that must be maintained. Required: Prepare a cash budget by quarter and in total for next year