(Cash budget) The Carmel Corporation’s projected sales for the first eight months of 2004 are as follows:
January $100,000
February 110,000
March 130,000
April 250,000
May $275,000
June 250,000
July 235,000
August 160,000
Of Carmel’s sales, 20 percent is for cash, another 60 percent is collected in the month following sale, and 20 percent is collected in the second month following sale. November and December sales for 2003 were $220,000 and $175,000, respectively. Carmel purchases its raw materials two months in advance of its sales equal to 70 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchases for April sales are made in February and payment is made in March. In addition, Carmel pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments for $23,000 are made each quarter beginning in March. The company’s cash balance at December 31, 2003, was $22,000; a minimum balance of $20,000 must
