Required:

(a) Prepare a schedule of expected cash collections for sales for each of the months July to September.

(b) Prepare a schedule of expected cash disbursements for purchases for the quarter to September 30, 2004.

(c) Prepare a cash budget, with a total column, for the quarter ending September 30, 2004, showing the expected receipts and payments for each month.

Use the below template as a guide to present answer

Francis and Company has planned a cash budget for the third quarter of 2004. The cash balance on July 1, 2004 is expected to be an overdraft of $82,000. Extracts from the sales and purchases budgets are as follow: Month Budgeted Sales Budgeted Purchases $800,000 May $900,000 $600,000 June $750,000 $550,000 July $650,000 $450,000 August $800,000 $500,000 September i) All sales are on credit and an analysis of the records shows that debtors settle according to the following pattern, in accordance with the credit terms 5/30, n90 50% in the month of sale 30% in the month following sale 20% the following month i) All purchases are on credit and past experience shows that 80% are settled in the month of purchase in order to take advantage of a 10% prompt settlement discount. The balance will be disbursed in the month after purchase. The credit terms of the suppliers 10/30, n60. iii) Wages and salaries are expected to be $1,800,000 per annum and are paid monthly. iv) Fixed operating expenses, which accrue evenly throughout the year, are estimated to be $2,400,000 per annum (including depreciation on fixed assets of $60,000 per month) and is settled monthly. v) Taxation of $80,000 has to be settled in August. vi) The company is expected to receive settlement on an insurance claim of $50,000 in September vii) Interest on investment in other companies of $25,000 is expected in July 2004 viii) A short-term investment in JMMB Ltd. of $80,000 will be liquidated in September 2004. ix) The business has made arrangements with their bankers for a loan of $250,000. The loan will be disbursed in two tranches 2004 $150,000 July 1 November 1, 2004 $100,000