Santa Fe Music, Inc. sells electronic keyboards. The following information on operating costs has been extracted from Santa Fe Music's budgets for December of this year and the first months of next year:

                       Dec.           Jan.           Feb.              Mar.

Payroll         $12,000        $13,000     $22,000      $16,000

Insurance     4,000           4,000         4,000           4,000

Rent               6,000            6,000         6,000            6,000

Depreciation 2,000            2,000         2,000            2,000

Taxes             1,200            1,400          2,300           2,000

In addition to the above operating costs, enough keyboards are purchased each month to keep inventory at 40 percent of the next month's projected sales. The company is expected to comply with this policy on December 1. Budgeted sales are:

                                                  Dec.       Jan.         Feb.        Mar.

Budgeted sales in units         40           45            60           40

The average cost of a keyboard is $500. The merchandise is paid in the month following its purchase. All expenses are paid in the month in which they are incurred.

Prepare a purchase budget from December to March; then prepare a cash-out budget for Santa Fe Music, Inc. for the first three months of the next year.

 The average cost of a keyboard is $500. The merchandise is paid in the month following its purchase. All other expenses are paid in the month in which they are incurred. On average, the keyboard sells for $1,500. From each sale, 40 percent of the sale price is collected in the month of the sale. The balance is charged in the month following the sale.

Prepare a cash budget for the first three months of next year. The beginning cash balance on January 1 is budgeted at $50,000.