"GrowMaster Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year

"GrowMaster Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm’s marketing director, has completed the following sales forecast." Month Sales Month Sales January $900,000 July $1,150,000 February $1,000,000 August $1,500,000 March $900,000 September $1,600,000 April $1,100,000 October $1,600,000 May $850,000 November $1,500,000 June $950,000 December $1,700,000 • Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information. • All sales are made on credit. • GrowMaster’s excellent record in accounts receivable collection is expected to continue, with 60% of sales collected in the month after sale and the remaining 40 percent collected two months after the sale. • Inventory purchased in the months of April, May and June are $495,000, $382,500 and $427,500 respectively. • All purchases are made on account. Historically, 75% of accounts payable have been paid during the month of purchase, and the remaining 25% in the month following purchase. • Hourly wages and fringe benefits, estimated at 30% of the current month’s sales, are paid in the month incurred. • General and administrative expenses are projected to be $1,473,000 for the year. A breakdown of the expenses follows. All expenditures are paid monthly throughout the year, with the exception of property taxes, which are paid in four equal installments at the end of each quarter. (divide each expense by 12 to get the monthly expenditure, except property taxes which should be divided by 4 to get quarterly taxes). Salaries and fringe benefits $315,000 Advertising 360,000 Property Taxes 80,000 Insurance 192,000 Utilities 180,000 Depreciation 346,000 Total $1,473,000 • GrowMaster maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at the end of the month, the company borrows against its 12% line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $50,000.

Required: solve above question with steps (better in hand writing)

1. Prepare the cash receipts budget for the second quarter.

2. Prepare the cash payments budget for the second quarter.

3. Prepare the cash budget for the second quarter.