QUESTION 3 Prepare a cash budget for the first quarter for ABC Ltd., given the following data. Management has projected total and credit sales for the first three months of 1997 as follows: Year Credit Sales Total Sales 825,000 Month December January February March 1998 1999 730,000 770,000 690,000 780,000 855,000 1999 840,000 920,000 1999 Based on historical data, 25% of the credit sales are collected in the month the sales were made and 75% the next month. Purchases are estimated to be 60% of next month's total sales, but are paid for in the month following the order. This means that the expenditure for inventory in each month is 60% of that month's sales. QUESTION 3 The beginning and target cash balance is $100,000. Other disbursements are as follows: March Expense Item Wages Rent Other Expense Taxes January 250,000 27,000 10,000 105,000 February 290,000 27,000 12,000 290,000 27,000 14,000 Dividends 40,000 75,000 Capital Expenditures