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

Jan. Feb. March

Budgeted sales 4,000 units 5,000 units 7,000 units

Each unit sells for a price of $10. Sales are made for 20% cash and 80% on account. From experience, the company has learned that a months sales on account are collected according to the following pattern:

Month of sale 60%

First month following sale 30%

Second month following sale 8%

Uncollectible 2%

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

1. Prepare a sales budget for January, February, March and the quarter.

	January	February	March	Quarter
Sales in Units
X

2. Compute the budgeted cash receipts for March.

3. The following additional information has been provided for March:

Inventory purchases (all paid in March) $28,000

Operating expense (all paid in March) $40,000

Depreciation expense for March $5,000

Dividends paid in March $4,000

Prepare a cash budget for the month of March, using this and the budgeted cash receipts you computed for part (1) above. The company can borrow in any dollar amount and will not pay interest until April.

Cash balance, beginning
Total cash available
Less disbursements:
Total disbursements:
Cash excess (deficiency)
Financing-borrowing
Cash balance, ending