The Doley Company has planned the following sales for the next three months:

JanFebMar

Budgeted sales$40,000$50,000$70,000

Sales are made 15% for cash and 85% on account. Sales are collected according to the following pattern:

Month of sale55%

First month following sale35%

Second month following sale7%

Uncollectable3%

The company requires a minimum cash balance of $5,000.The beginning cash balance in March is budgeted to be $6,000.

The following additional information has been provided for March:

Inventory purchases (all paid in March)$32,000

Operating expenses (all paid in March)$30,000

All other expenses (all paid in March)$5,000

Dividends paid in March$5,000

Machine (purchased and paid for in March)$15,000

Depreciation expense for March (not included above)$7,000

The company can borrow and will not pay interest until April if they do.

The interest rate on borrowing is 6% per year.

Required:

a) Compute the budgeted cash receipts for March.(5 marks)

b) Complete the cash budget for the month of March, including the amount of borrowing required, if any.(5 marks)