Fab and Fast Ltd buys and sells motor vehicle accessories. The firm’s estimated sales and expenses for the first 4 months of 2025 are shown below.

Actual sales for December 2024 were $900  000 and actual expenses were $208  000.
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 2025 is expected to be $75  000.
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 $24  000 per month and wages of $104  000 are included in the monthly expenses of $208  000. 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 2025.

b) Prepare a monthly purchases budget for the first quarter of 2025.

c) Prepare a monthly schedule of expected cash payments for the first quarter of 2025.

d) Prepare a monthly cash budget for the first quarter of 2025.

e) Prepare a monthly budgeted statement of financial performance for the first quarter of 2025.

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.

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January February March April Sales Expenses $1 050 000 $208 000 1 300 000 900 000 850 000 208 000 208 000 208 000