Problem 8-23 {Static} Schedule of Expected Cash Collections: Cash Budget [LOB-2, LOB-8] Prime Products hopes to borrow $30,000 on April 1 and repay it plus interest of$1,200 on June 30. The following data are available for the months April through June, during which the loan will be used: a. On April 1, the start ofthe loan period, the cash balance will be $24,000. Accounts receivable on April 1 will total $140,000, of which $120,000 will be collected during April and $16,000 will be collected during May. The remainder will be uncollectible. b. The company estimates 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% are bad debts that are never collected. Budgeted sales and expenses for the three month period follow: April May June Sales Call on account) $ 366,600 $ 400,666 5 250,066 Merchandise purchases $ 216,600 $ 160,666 5 130,066 Payroll $ 29,999 5 29,999 5 13,999 Lease payments $ 22,600 $ 22,666 $ 22,066 Advertising $ 66,600 $ 60,666 $ 50,066 Equipment purchases $ 55,066 Depreciation $ 15,600 $ 15,666 $ 15,066 c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $140,000. Req u ired: 1. Calculate the expected cash collections for April, May, and June, and forthe three months in total. 2. Prepare a cash budget, by month and in total, for the threemonth period. Assume the $30,000 loan is made on April 1 and repaid with interest on June 30. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the expected cash collections for April, May, and June, and for the three months in total. Tm. cash collections ---- Required 2 > Required 1 Required 2 Prepare a cash budget, by month and in total, for the three-month period. Assume the $30,000 loan is made on April 1 and rep with interest on June 30. Note: Cash deficiency, repayments and interest should be indicated by a minus sign. Prime Products Cash Budget April May June Quarter Beginning cash balance Add receipts: Collections from customers Total cash available 0 0 0 0 Less cash disbursements: Merchandise purchases Payroll Lease payments Advertising Equipment purchases 0 0 Total cash disbursements 0 0 0 Excess (deficiency) of cash available over disbursements 0 0 0 Financing: Borrowings 0 Repayments Interest Total financing 0 0 Ending cash balance 0 $ 0 $ 0 $