Machining Ltd prepares its cash budget quarterly. For the first quarter of 2012, i.e. January, February and March, its estimated sales are Shs 500,000, Shs 600,000 and Shs 750,000 respectively. Actual sales for the month of December 2011 were Shs 520,000. About 80% of the company's total sales are on cash basis and the rest on credit, collectible after one month from the month of sale. Machining Ltd pays its creditors, which are usually 40% of sales, one month after the sale month. The forecasts of salary expenses for first three months of 2012 are expected to be Shs 280,000 per month. The company is expected to spend Shs 80,000 in February and Shs 190,000 in March on capital expenditures. A previously declared of Shs 75,000 is to be paid in January and miscellaneous expenses are estimated to be Shs 15,000 per month. The company also has bills payable in February amounting to Shs 36,000. Assuming that the cash balance on 1st January 2012 is Shs500,000 and that the minimum cash balance requirement of the company is Shs 500,000, prepare a cash budget for the first quarter of 2012. (10 marks)

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