Strategy and The Master Budget 129 Problems Problem 1 (Schedule of Expected Cash Collections and Disbursements) Cookie Products, a distributor of organic beverages, needs a cash budget for September. The following information is available: The cash balance at the beginning of September is P9,000. b. Actual sales for July and August and expected for September as are follows: July August September Cash sales P 6,500 P5,250 P 7,400 Sales on account 20,000 30.000 40.000 Total sales P26,500 P35,250 P47.400 Sales on account are collected over a three-month period in the following ratio: 10% collected in the month of sale, 70% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible. c. Purchases of inventory will total P25,000 for September. Twenty percent of a month's inventory purchases are paid for during the month of purchase. The accounts payable remaining from August's inventory purchases total P16,000, all of which will be paid in September. d. Selling and administrative expenses are budgeted at P13,000 for September. Of this amount, P4,000 is for depreciation. e. Equipment costing P18,000 will be purchased for cash during September, and dividends totaling P3,000 will be paid during the month. f. The company must maintain a minimum cash balance of P5,000. An open line of credit is available from the company's bank to bolster the cash position as needed. Required: 1. Prepare a schedule of expected cash collections for September. 2. Prepare a schedule of expected cash disbursements during September for inventory purchases. 3. Prepare a cash budget for September. Indicate in the financing section any borrowing that will be needed during September