You have just been hired as a management trainee by Cravat Sales Company, a nationwide distributor of a designers silk ties. The company has an exclusive franchise on the distribution of the ties, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the management team. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are anxious to make a favorable impression on the president and have assembled the information below.

The company desires a minimum ending cash balance each month of $10,000. The ties are sold to retailers for $8 each. Recent and forecasted sales in units are as follows:

January (actual)

20,000

June

64,000

February (actual)

31,000

July

49,000

March (actual)

32,000

August

42,000

April

38,000

September

38,000

May

53,000

The large buildup in sales before and during June is due to Fathers Day. Ending inventories are supposed to equal 90% of the next months sales in units. The ties cost the company $5 each.

Purchases are paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25% of a months sales are collected by month-end. An additional 50% is collected in the following month, and the remaining 25% is collected in the second month following sale. Bad debts have been negligible.

		Sales Budget
	April	May	June	Quarter
Budgeted Sales in units	$38,000	$53,000	$64,000	$155,000
Selling Price per unit	$8	$8	$8	$8
Total Sales	$304,000	$424,000	$512,000	$1,240,000

Create a schedule of expected cash collections from sales, by month and in total.

	April	May	June	Quarter
February Sales
March Sales
April Sales
May Sales
June Sales
Total Cash Collections