In the fourth quarter of 2011, Eurofit Cycling, a bike shop, had the following net income:
Sales $550,000
Less cost of sales 250,000
Gross margin 300,000
Selling and administrative 70,000
Income before taxes 230,000
Income taxes 80,500
Net income $ 149,500
Purchases in the fourth quarter amounted to $195,000.
Estimated data for Eurofit Cycling for 2012 are as follows:
|
Quarter 1
|
Quarter 2
|
Quarter 3
|
Quarter 4
|
|
Sales
|
$400,000
|
$475,000
|
$550,000
|
$600,000
|
|
Cost of sales
|
170,000
|
185,000
|
220,000
|
230,000
|
|
Purchases
|
160,000
|
200,000
|
225,000
|
267,000
|
|
Selling and administration
|
67,000
|
69,000
|
71,000
|
73,000
|
|
|
|
|
|
Taxes are 35 percent of pretax income and are paid in the quarter incurred. Fifty percent of sales are collected in the quarter of sale and 50 percent are collected in the next quarter. Seventy percent of purchases are paid in the quarter of purchase and 30 percent are paid in the next quarter. Selling and administrative expenses are paid in the quarter incurred except for $7,000 of depreciation included in selling and administrative expense. A capital expenditure for $20,000 is planned for the fourth quarter of 2015.
Required
Prepare a cash budget for each quarter of 2015.