Cruises, Inc. has budgeted sales revenues as follows:

	June	July	August
Credit sales	$135,000	$125,000	$90,000
Cash sales	90,000	255,000	195,000
Total sales	$225,000	$380,000	$285,000

Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month.

Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase.

Budgeted inventory purchases are:

June	$300,000
July	240,000
August	105,000

Other cash disbursements budgeted:

(a)	selling and administrative expenses of $58,000 each month
(b)	dividends of $125,000 will be paid in July, and
(c)	purchase of equipment in August for $45,000 cash

The company wishes to maintain a minimum cash balance of $65,000 at the end of each month.

The company borrows from the bank at 7.75% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $70,000. Assume the borrowed money in this case is for one month.

Required:

1. Prepare a cash budget for the months of July and August.

2. Prepare separate schedules for expected collections from customers and expected payments for purchase of inventory.