Question $2(12$ marks$)$

The Nature Company has planned the following sales for the next three months of $2025$ :

Sales budget

$\frac{\text{J}\text{a}\text{n}\text{u}\text{a}\text{r}\text{y}}{\text{\$}40,000}$

$\frac{\text{F}\text{e}\text{b}\text{r}\text{u}\text{a}\text{r}\text{l}}{\text{\$}50,000},\frac{\text{M}\text{a}\text{r}\text{c}\text{h}}{\text{\$}70,000}$

Sales are $20\%$ cash and $80\%$ on account. The company's account collection pattern is:

Month of sale $60\%$

First month following sale $30\%$

Second month after sale $8\%$

Uncollectible $2\%$ minimum $$5,000.$ The beginning cash balance in March

The company requires a minimum cash balance of $$5,000.$ $$6,000.$

is budgeted to be $$6,000.$

Januer $32000$

Required: a$)$ Compute the total budgeted cash receipts for the month of Marcur $32000$

cash Reweph for month march $2025$:$$48160$

Cach $20\%$ of Sales $14000=$$$62160$

b$)$ The following additional information has been provided for March, $2025$ :

Inventory purchases $(50\%$ paid in month of $$56,000$

purchase, remainder in following month$)$

Operating Expenses $(80\%$ paid in current

month, remainder in following month$)$

Depreciation expense

Dividends paid

Accounts payable Feb. $29$ : Inventory $$20,000$;

$$40,000$

and

Operating Expenses $$10,000$

Prepare a cash budget in good form for the month of March of the current year,

using this information and the budgeted cash receipts you computed for part a$)$ above.

The company can borrow in any dollar amount and will not pay interest until April.