Keven Johnson, owner of Meyers Department Store, is negotiating a $\$ 50,000,15$ percent, 4 -month loan from the Lee County National Bank, effective October 1, 2000. The bank loan officer has requested that Meyers prepare a cash budget for each of the next four months as evidence of its ability to repay the loan. The following information is available as of September 30, 2000:

a. The accounts payable are for September merchandise purchases and operating expenses and will all be paid in October. Sales forecasts for the next few months are October, $\$ 110,000$; November, $\$ 150,000$; December, $\$ 200,000$; January, $\$ 100,000$; February, $\$ 70,000$.

b. Collections on sales are usually made at the rate of 20 percent during the month of the sale, 60 percent during the month following the sale. and 10 percent dur. ing the second month after the sale. Four percent of accounts receivable are written off as uncollectible. Of the $\$+8,750$ of accounts reccivable at september $30, \$ 32,500$ will be collected in October, and $\$ 16,250$ will be collected in November. Cost of goods sold is 60 percent of sales, with all purchases paid for in the month following purchase. Ending inventory should always cqual the cost of the goods that will be sold during the next month. Operating expenses are $\$ 12,000$ a month plus 5 percent of sales, all paid in the month following their incurrence.
Prepare a cash budget showing receipts and disbursements for (ctober. Vovember. December, and January. Also prepare supporting schedules for cash collections. purchases, and operating expenses. Assume that the loan plus interest will be paid on January 31 .

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Cash on hand.. Accounts receivable. Inventory... Accounts payable $ 4,500 48,750 32,000 72,250