It is November 2010 and you have been asked to work on next year's cash budget for the Far Flung Sports Company. You have gathered the following information:

Required:
(a) Prepare a monthly cash budget for 2011 and the first quarter of 2012. Prepare your calculations to one decimal.
(b) Evaluate the month-end cash figures that the cash budget predicts.

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Estimated December 31, 2010, cash balance Estimated Data for 2011: Total sales for 2011 Percent of total sales in January Percent of total sales in June, July, and August, spread evenly Percent of total sales in the eight remaining months, spread evenly Percent of monthly sales that are cash sales Percent of monthly credit sales that are collected one month after the sale Percent of monthly credit sales that are collected two months after the sale Percent of monthly credit sales that are collected three months afer the sale Annual depreciation expense Quarterly capital expenditures, paid quarterly starting in March Annual income tax expense, paid quarterly starting in February Monthly wages and salaries Annual purchases, made proportionately according to sales Percent of monthly purchases that are cash purchases Percent of monthly credit purchases that are paid one month after purchase Percent of monthly credit purchases that are paid two months after purchase Percent of monthly credit purchases that are paid three months after purchase Annual rent expense, paid monthly $1,500,000 $32,500,000 8% 60% 32% 10% 25% 50% 25% $500,000 $80,000 $400,000 $500,000 $22,500,000 5% 50% 20% 30% $120,000