Fab and Fast Ltd buys and sells motor vehicle accessories. The firm’s estimated sales and expenses for the first 4 months of 2017 are:

	Sales		Expenses
January February March April	$1 000000 1 300000 900000 800 000		$258000  258000 258000 258000

Actual sales for December 2016 were $900 000 and actual expenses were $258000.

All sales are on credit, and the firm estimates that 40% of the accounts receivable will be collected in the month of sale with the other 60% collected the following month. The average selling price for the products sold is $300. The cash balance as at 1 January 2017 is expected to be $70000.

The firm pays for 30% of its purchases in the month of the purchase and the balance is paid in the following month. Average gross profit margin is 40%. The firm plans to continue maintaining an end-of-month inventory equal to 10% of the next month’s projected cost of sales. Depreciation amounting to $24000 per month and wages of $104000 are included in the monthly expenses of $258000. Other expenses are paid during the month they are incurred.

Required

A. Prepare a monthly schedule of expected cash receipts for the first quarter of 2017.

B. Prepare a monthly purchases budget for the first quarter of 2017.

C. Prepare a monthly schedule of expected cash payments for the first quarter of 2017.

D. Prepare a monthly cash budget for the first quarter of 2017.

E.  Prepare a monthly budgeted income statement for the first quarter of 2017.

F. Calculate the difference between the expected increase in cash and the expected profit or loss for the first quarter. Explain why the two amounts are different.