Bristol Brights purchases and installs sky lights. The entity’s estimated sales and expenses for the first 4 months of 2017 are:

	Sales		Expenses
January February March April	$1 087 500 1 410 000 975 000 870 000		$285 000 285000 285000 285000

Actual sales for November and December 2015 were $825 000 and $975 000 respectively and actual expenses were $285 000 for each month.

All sales are on credit, and the firm estimates that 40% of the accounts receivable will be collected in the month after sale with the other 60% collected the second month following sale. The average selling price for the products sold is $5000. The cash balance as at 1 January 2017 is expected to be $100000.

The firm pays for 30% of its purchases in the month after purchase and the balance is paid in the second month following purchase. Average gross profit margin is 50%. The firm plans to continue maintaining an end-of-month inventory equal to 20% of the next month’s projected cost of sales. Depreciation amounting to $24000 per month and wages of $123000 are included in the monthly expenses of $285000. 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.