Francis and Company has planned a cash budget for the third quarter of 2004. The cash balance on July 1, 2004 is expected to be an overdraft of $82,000. Extracts from the sales and purchases budgets are as follows: Budgeted Sales Budgeted Purchases Month $800,000 $900,000 $750,000 $650,000 $800,000 May June $600,000 July August September $550,000 $450,000 $500,000 All sales are on credit and an analysis of the records shows that debtors settle according to the following pattern, in accordance with the credit terms 5/30, n90: i) 50% in the month of sale 30% in the month following sale 20% the following month All purchases are on credit and past experience shows that 80% are settled in the month of purchase in order to take advantage of a 10% prompt settlement discount. The balance will be disbursed in the month after purchase. The credit terms of the suppliers - 10/30, n60. Wages and salaries are expected to be $1,800,000 per annum and are paid monthly. ii) iii) Fixed operating expenses, which accrue evenly throughout the year, are estimated to be $2,400,000 per annum, (including depreciation on fixed assets of $60,000 per month) and is settled monthly. Taxation of $80,000 has to be settled in August. iv) v) The company is expected to receive settlement on an insurance claim of $50,000 in September. vi) vii) Interest on investment in other companies of $25,000 is expected in July 2004. viii) A short-term investment in JMMB Ltd. of $80,000 will be liquidated in September 2004. ix) The business has made arrangements with their bankers for a loan of $250,000. The loan will be disbursed in two tranches: July 1, 2004 November 1, 2004 $150,000 $100,000 Required: (a) Prepare a schedule of expected cash collections for sales for each of the months July to September. Prepare a schedule of expected cash disbursements for purchases for the quarter to September 30, 2004. Prepare a cash budget, with a total column, for the quarter ending September 20 200d (b) (c)