Problem D Galaxy Lighting Company manufactures and sells lighting fixtures. Estimated sales for the next three months are:

September

$350,000

October

500,000

November

400,000

Sales for August were $400,000 and December is estimated as $420,000. All sales are on account. Galaxy Lighting Company estimates that 80% of the accounts receivable are collected in the month of sale with the remaining 20% collected the following month. The units sell for $40 each.

Generally, 60% of purchases are due and payable in the month of purchase with the remainder due the following month. Purchase cost per unit for materials is $18. The company maintains an end-of-the-month inventory of 1,000 units plus 10% of next month's unit sales.August's ending inventory is estimated at 1,875 units and November's ending inventory is estimated as 2,500 units.The accounts payable balance on August 31 is expected to be $13,500 and should be paid in September.

1. Write a sales budget in dollars and units for September, October, and November.
2. Write a schedule of cash receipts from customers.
3. Write a purchases budget for September, October and November.
4. Write a schedule of cash payments for purchases.