Water Sport Inc. manufactures a smal personal water tube used for children leaming to swim. Management is now preparing detailed budgets for

the third quarter, July through September, and has assembled the following information to assist:

a$.$ The Marketing Department has estimated sales as follows for the remainder of the year $($number of water tubes$)$:

Prepare a direct materials purchases budget for synthelic rubber compound, by month and in total, for the third quarter. Also prepare a schedule

of expected cash disbursements for synthetic rubber compound, by month and in lotal, for the third quarter.

b$.$ All sales are on account. Based on past experience, sales are expected to be collecled in the following pattern:

$50\%in$ the month $of$ sale

$45\%in$ the month following sale

$5\%$ uncollectble

uncollectble

The beginning accounts receivable balance $($excluding uncollectible amounts$)$ on July $1$ will be $$165,000$

$c.$ The company maintains finished goods invertories equal to $20\%$ of the following month's sales. The inventory of finished goods on July $1$ will be

d$.$ Eact wits.

d$.$ Each water tube requires $3$ kilograms of synthetic polyisoprene rubber compound. To prevent shortages, the compariy would like the irventory of

synthetic rubber compound on hand at the end of each month to be equal to $20\%$ of the following month's production needs. The inventory of

synthetic rubber compound on hand on July $1$ will be $4,320$ kilograms.

e$.$ The synthetic rubber compound costs $$3\mathrm{.}50$ per kilogram. Water Sport pays for $70\%$ of its purchases in the month of purchase; the remainder is

Required:

Prepare a sales budget, by month and in total, for the third quarter. $($Show your budget in both units of water tubes and dollars.$)$ Also prepare a

Prepare a sales budget, by month and in tolal, for the third quarter. $($Show your bected cash collections, by month and in total, for the third quarter.

Prepare a production budget for each of the months July through October.