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 August September 7,600 6,199 5.100 October November December 4,000 3,600 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 ses in the month of sale 45% in the month following sale 5% uncollectible The beginning accounts receivable balance (excluding uncollectible amounts) on July 1 will be $165,500 c. The company maintains finished goods inventores 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 $14.700 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, Budgeted sales (units) Selling price per unit Total budgeted sales Sales budget July August September Quarter 7.600 6.100 5 100 18 800 60 $ 60 $ 60 $ 50 456 000 $ 366 000 $ 306,000 $1,128.000 $ s September Quarter 165,500 Schedule of expected cash collections July August Accounts receivable beginning balance 165 500 July sales 228.000 205,200 August Sales 183 000 September sales Total cash collections 393 500 388 200 164.700 153 000 317.700 165,500 2. Prepare a production budget for each of the months July through October Budgeted sales (units) Add Desired ending inventory Total needs Less Beginning inventory Required production (units) Production budget July August 7,600 6.100 1220 1020 8,820 7120 13.700 1.220 (4880) 5,900 September 5.100 800 5.900 1,020 4880 October 4000 720 4720 800 3920 Seved 3. Prepare a direct materials purchases budget for synthetic 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 total, for the third quarter Quarter Direct materials purchases budget July Required production (units) 4,000 Material D236 needed per unit (kgs) 3 Production needs (95) 14.640 Less Desired ending inventory kgs) 3,540 Total Matenal 0236 needs 18.180 Loss Beginning inventory (kg) Raw materials to be purchased 18.180 Cost of raw materials to be purchased at $400 per kg August 5,900 3 17,700 September 4.880 3 14640 17,700 14.640 17,700 14,640 0 Quarter Schedule of expected cash disbursement July August September Accounts payable beginning balance July purchases August purchases September purchases Total cash disbursements $ $ as 0 $ 0