Problem 3 - Budgeting - 13 marks - 25 minutes Charlie Co. has planned the following sales and purchases for the next three months: January February March Budgeted Sales $40,000 $50,000 $70,000 Budgeted purchase of inventory $35,500 $46,700 $95,500 Customers pay 20% of the sales in cash at the time of the transaction and 80% on account. From experience, the company has learned that a month's sales on account are collected according to the following pattern: Month of sale 60% 30% First month following sale Second month following sale Uncollectible 8% 2% The company pays 45% of the cost of the inventory in the month of purchase, and 55% during the following month. The company requires a minimum cash balance of $5,000 to start a month. The beginning cash balance in March is budgeted to be $6,000. The following additional information has been provided for March: Operating expenses $25,000 Dividends paid in March $4,000 The operating expenses include $5,000 depreciation. All operating expenses are paid during each month. Required: a. Calculate the budgeted cash collection for March. b. Calculate the balance of accounts payable at the end of March. c. Prepare a cash budget in good form for the month of March (The company can borrow in any dollar amount and will not pay interest until April)