Romeo Lindo, the management accountant at Woods Household Supplies, is in the process of planning the companys cash needs for the last quarter of 2016. Extracts from the sales and purchases budgets are as follows: Month 2016 Cash Sales Sales On Account Purchases On Account August September October November December $71,000 $55,500 $38,400 $36,500 $56,750 $520,000 $640,000 $760,000 $680,000 $850,000 $420,000 $400,000 $520,000 $440,000 $540,000 i) An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 4/30, n90: 50% in the month of sale 40% in the first month following the sale 10% in the second month following the sale ii) Accounts payable are settled as follows, in accordance with the credit terms 5/30, n60: 75% in the month in which the inventory is purchased 25% in the following month iii) In the month of November, an old motor vehicle, with net book value of $95,000, will be sold for cash to an employee at a gain of $45,000. The employee will be allowed to pay a deposit equal to 50% of the amount in November and the balance will be settled in two equal amounts in December 2016 & January 2017 iv) Furniture and Fixtures, which is estimated to cost $240,750, will be purchased for cash in December. v) A money market instrument purchased by Woods Household Supplies with a face value of $500,000 will mature on October 20, 2016. In order to meet the financial obligations of the business, management has decided to liquidate the investment upon maturity. On that date quarterly interest computed at a rate of 6% per annum is also expected to be collected. Discussion Question _Budgets Page 2 vi) The manager of Woods Household Supplies has negotiated with a tenant for rental of storage space to him beginning October 2016. The rental is $864,000 per annum. The first months rent along with one months safety deposit will be collected from the tenant on October 1. Thereafter, the monthly rental in expected to be received at the beginning of each month. vii) Fixed operating expenses which accrue evenly throughout the year, are estimated to be $2,016,000 per annum, and are settled monthly. Monthly depreciation expenses of non-current assets of $56,000 are included in these costs. viii) Other operating expenses are expected to be $168,000 per quarter and are settled monthly. ix) Wages and salaries are expected to be $2,916,000 per annum and will be paid monthly. x) At the recently concluded negotiations between management and the union representing the workers it was agreed that Woods Household Supplies should make retroactive payments in the amount of $1,140,000 to employees. The payment is being settled in four equal tranches. The third payment becomes due and payable in October of 2016. xi) The cash balance on September 30, 2016 is expected to be an overdraft of $175,000. Required: (a) Prepare a schedule of budgeted cash collections for sales on account for each of the months October to December 2016 (b) Prepare a schedule of expected cash disbursements for purchases on account for the quarter to December 31, 2016. (c) Prepare a cash budget, with a total column, for the quarter ending December 31, 2016, showing the receipts & payments for each month.