You have recently been hired by Scott Mackinnon & CO a small company that produces customized boxes in a variety of sizes for different purchasers. Scot MacKinnon, the owner of the business, works primarily in the sales and production areas of the company. Currently the company basically puts receivables in one pile and payables in another pile. A part$-$time bookkeeper comes in periodically and deals with the piles. You have been fired toe organize the financial system.

The company has had the following gross sales teach quarter for the year just ended:

$$ First quarter $$1,102,000$

$$ Second quarter $$1,141,000$

$$ Third quarter $$1,125,000$

$$ Fourth quarter $$1,061,000$

After meeting with Scott, you have determined the following:

Sales: the firm has very marginal seasonality and each of last year$$s quarterly sales are projected to grow at $8\%$ per quarter

Accounts Receivables:

$$ All sales are made on credit.

$40\%$ of the sales are collected in $45$ days and the remaining sales are collected in the following quarter.

$$ Last year$$s accounts receivable balance was $$675,00,$ however a major customer just went bankrupt and Scott thinks that $10\%$ of the receivable balance will not ne collected.

Inventory and Accounts Payables

$$ In the current quarter, the firm orders $50\%$ of the next quarter$$s projected sales.

$40\%$ of accounts payables are paid in $30$ days and the balance is paid in the following quarter.

$$ Last year$$s closing accounts payables were $$350,436.$

Operating expenses

$$ Wages, taxes, and other expenses are estimated to be $25\%$ of each quarter$$s gross sales.

Capital Expenditures

$$ The firm plans to send $$100,000$ on a new machine in the second quarter and $$290,000$ on expanding its warehouse during the third quarter.

Other.

$$ Quarterly interest payments of $$185,000$ per quarter

$$ The firm$$s $$250,000$ revolving operating line of credit charges $12\%$ per annum and interest is paid on the quarterly loan balanced in the following quarter $($paid in arrears$).$

$$ The firm ended the year with a $$140,000$ in cash.

$$ Minimum quarterly cash balance is $$135,000.$

Using the information noted above, Scott has asked you to$.$

a$)$ Completed a quarterly cash budget.

b$)$ Prepare a financial plan clearly indicating the quarterly balance of the firm$$s revolving operating line of credit and the amount interest paid each quarter.