TBA, Inc., manufactures and sells concrete block for residential and commercial building.

TBA expects the following unit sales, unit selling price and desired ending inventory in 2021:

Quarter	Sales (Units)	Selling Price (per unit)	Ending Inventory (units)
1	2,000,000	$.75	500,000
2	6,000.000	$.75	500,000
3	6,000,000	$.85	100,000
4	2,000,000	$.85	100,000

Inventory on both January 1, 2021, and December 31, 2021, is expected to be 100,000 blocks.

Each block requires 26 pounds of raw materials (a mixture of cement, sand, gravel, shale, pumice, and water).

TBA's raw materials inventory policy is to have 5 million pounds in ending inventory for the third and fourth quarters and 8 million pounds in ending inventory for the first and second quarters. Thus, desired direct materials inventory on both January 1, 2021, and December 31, 2021, is 5,000,000 pounds of materials. Each pound of raw materials costs $0.01.

Each block requires 0.015 direct labor hour; direct labor is paid $14 per direct labor hour.

Variable overhead is $8 per direct labor hour. Fixed overhead is budgeted at $320,000 per quarter ($100,000 for supervision, $200,000 for depreciation, and $20,000 for rent).

TBA also provided the information that beginning finished goods inventory is $55,000; and the ending finished goods inventory budget for TBA for the year $67,000.

TBA's only variable marketing expense is a $0.05 commission per unit (block) sold. Fixed marketing expenses for each quarter include the following:

• Salaries = $20,000
• Depreciation = $5,000
• Travel = $3,000

Advertising expense is $10,000 in Quarters 1, 3, and 4. However, at the beginning of the summer building season, TBA increases advertising; in Quarter 2, advertising expense is $15,000.

TBA has no variable administrative expense. Fixed administrative expenses for each quarter include the following:

• Salaries = $35,000
• Insurance = $4,000
• Depreciation = $12,000
• Travel = $2,000

Income tax rate is 30% of operating income.

Of the sales on account, 70 percent are collected in the quarter of sale; the remaining 30 percent are collected in the quarter following the sale. Total sales for the fourth quarter of 2020 totaled $2,000,000.

All materials are purchased on account; 80 percent of purchases are paid for in the quarter of purchase. The remaining 20 percent are paid in the following quarter. The purchases for the fourth quarter of 2020 were $500,000.

TBA requires a $100,000 minimum cash balance for the end of each quarter. On December 31, 2020, the cash balance was $120,000.

Money can be borrowed and repaid in multiples of $100,000. Interest is 12 percent per year. Interest payments are made only for the amount of the principal being repaid. All borrowing takes place at the beginning of a quarter, and all repayment takes place at the end of a quarter.

Budgeted depreciation is $200,000 per quarter for overhead, $5,000 for marketing expense, and $12,000 for administrative expense. (Remember that depreciation is not a cash expense and must be deleted from total expenses before the cash budget is prepared.)

The capital budget for 2021 revealed plans to purchase additional equipment for $600,000 in the first quarter. The acquisition will be financed with operating cash, supplementing it with short-term loans as necessary.

Corporate income taxes of $20,700 will be paid at the end of the fourth quarter.

9. Construct a budgeted income statement for the coming year.

10. Construct a cash receipts budget for each quarter of the coming year.

11. Construct a cash payments budget for each quarter of the coming year.

12. Prepare a cash budget for each quarter of the coming year.