Water Sport Inc. manufactures a small personal water tube used for children learning to swim. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist:

Water Sport Inc. manufactures a small personal water tube used for children learning 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): July 7,600 October 4,000 August 6.100 November 3,600 September 5.100 December 3,100 The selling price of the water tubes is $60. b. All sales are on account. Based on past experience. sales are expected to be collected in the following pattern: 50% in the month of sale 45% in the month following sale 5% uncollectable The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $165,500. c. The company maintains nished goods inventories equal to 20% of the following month's sales. The inventory of finished goods on July 1 will be 1,520 units. d. Each water tube requires 3 kilograms of synthetic polyisoprene rubber compound. To prevent shortages, the company would like the inventory 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 4,380 kilograms. e. The synthetic rubber compound costs $4.00 per kilogram. Water Sport pays for 70% of its purchases in the month of purchase; the remainder is paid for in the following month. The accounts payable balance for synthetic rubber compound purchases will be $14,?00 on July 1. Required: 1. 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 schedule of expected cash collections, by month and in total, for the third quarter. Answer is complete and correct. Sales budget July August September Quarter Budgeted sales 7,600 6,100 5,100 18,800 (units) Selling price per $ 60 60 $ 60 $ 60 unit Total budgeted $ 456,000 $ 366,000 $ 306,000 $ 1,128,000 salesx Answer is not complete. Schedule of expected cash collections July August September Quarter Accounts receivable, beginning 165,500 205,200 X 164,700 X 535,400 X balance July sales: 228,000 228,000 X August sales: 183,000 V 183,000 x September sales: 153,000 V 153,000 Total cash collections 393,500 388,200 317,700 1,099,4002. Prepare a production budget for each ofthe months July through October. 0 Answer is complete and correct. Budgeted sales {units} Add: Desired ending inventory a 1229 o \"123 o 300 o 72!} a Total needs 8,820 1120 5.900 4.720 Less: Beginning inventory 0 1,520 0 1,220 0 1,020 o 000 9 Required production (units) 7,300 5.900 4.386 3,926 3.Prepare a duectlnatenab purchases budget n synthec rubber contpound, 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 total, for the third quaner 9 Answer is complete but not entirely correct. Required production (units) Material D236 needed per unit {ms} 3 o 3 3 3 Production needs (kgs_} 21,900 17,700 14,640 54,240 Add: Desired ending inventory (kgs_) 0 3,540 0 2,928 0 2,352 0 8,820 9 Total Material 0236 needs 25,440 20,628 16,992 63,060 Less: Beginning inventory gs.) 0 4,380 0 3,540 0 2,928 0 10,848 0 Raw materials to be purchased 21,060 17,088 14,064 52,212 55st of raw materials to be purchased at $4.00 per $ 84,240 0 68,352 a 56,256 a $ 208,848 a X Answer is not complete. Schedule of expected cash disbursement July August September Quarter Accounts payable, beginning $ 14,700 $ 25,272 X $ 20,506 X $ 60,478 X balance July purchases: 58,968 V 58,968 X August purchases: 47,846 V 47.846 x September purchases: 39,379 V 39,379 V Total cash disbursements $ 73,668 $ 73,118 $ 59,885 $ 206,671