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

Jan Feb Mar

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 sale 55%

First month following sale 35%

Second month following sale 7%

Uncollectable 3%

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.

Hand write your solution and submit a picture for grading. Please include your name and student number on the page.

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)