Reference no: EM13483985

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.