Prickly Pear Ltd wishes to prepare a cash budget for the first quarter of 2016. In response to your request for past and projected financial data, you receive the following:

Projected sales (excludes GST):

November 2015 December 2015 January 2016 February 2016 March 2016 April 2016 May 2016

$144000 147000 198000 190000 288000 216000 216000

Of sales, 70% of sales are on credit, with 65% collected during the month of sale, 30% collected during the month following the sale, and 5% during the second month after the sale; 30% of the projected sales are for cash. Ignore GST. Since all suppliers require substantial lead time, purchases of inventory are made 2 months in advance of sale and are paid for 1 month in advance of sale. The cost of sales is 50% of the selling price. Other regular monthly cash payments (ignoring GST) are:

Salaries and wages Sales commissions (on credit sales only) General and administrative expenses Insurance Delivery expenses

$6600 10% $14850 $16500 3% of total sales

A special advertising campaign is planned that will require a cash payment of $16 650 on 1 March. An interim dividend of $13500 is planned for payment on 16 February.

On 1 January 2016, there was an outstanding bank debt of $90000 that must be paid off in 5 months by making principal repayments of $18000 at the end of each month. Interest is payable at the end of each month at 1% per month on the balance outstanding at the beginning of the month. The cash balance on 1 January is estimated to be $112500.

Required

Prepare the cash budget of Prickly Pear Ltd covering January, February and March 2016.