PROBLEM $2(30$ POINTS$)$ Show All Your Work as shown in class $($Use budget sheets to help

you$)$

Yankee delivers candles. The company has an open line of credit to borrow from at the bank

up to $$217,500$ per quarter at $2\%$ per month. Borrowing is in increments of $$1,000.$

a$.$ On January $1,$ the beginning of the first quarter, the company will have a cash balance of

$$100,125.$ The company must maintain at least $$29,000$ in cash at end of each month.

b$.$ Actual sales for the last two manths and budgeted sales for the first quarter follow $($all

sales are on account$)$:

November $($actual$)$

$$543,750$

December $($actual$).$

$$652,500$

January

$$870,000$

February

$$1,305,000$

March

$$696,000$

Past experience shows that $20\%$ of a month's sales are collected in the month of sale, $55\%$

in the month following sale, and $25\%$ in the second month following sale.

c$.$ Budgeted merchandise purchases and budgeted expenses for the first quarter are given

below:Past experience shows that $20\%$ of a month's sales are collected in the month of sale, $55\%$

in the month following sale, and $25\%$ in the second month following sale.

Accounts

payable for merchandise purchases on December $31,$ which will be paid during January,

total $$391,500.$

d$.$ Vehicle costing $$22,000$ will be purchased for cash during February.

Required:

Prepare a schedule of expected cash collections for January, February, and March and

for the quarter in total.

Prepare a cash budget for January, February and March and for the quarter in total