You have decided to prepare a cash budget for the upcoming fourth quarter in order to show management the benefits that can be gained from proper cash planning . You have worked with accounting and other areas to gather the information assembled below . The company sells many styles of bracelets , but all are sold for the same $ 10 price . Actual sales of bracelets for the last three months and budgeted sales for the next six months follow : The concentration of sales in the fourth quarter is due to the Christmas holiday . Sufficient inventory should be on hand at the end of each month to supply 40 % of the bracelets sold in the following month . Suppliers are paid $ 4 for each bracelet . Fifty-percent of a month ' s purchases is paid for in the month of purchase ; the other 50 % is paid for in the following month . All sales are on credit with no discounts . The company has found , however , that only 20 % of a month ' s sales are collected in the month of sale . An additional 70 % is collected in the following month , and the remaining 10 % is collected in the second month following sale . Bad debts have been negligible . Monthly operating expenses for the company are given below : Variable expenses : Sales commissions 4 % of sales Fixed expenses : Advertising $ 220,000 Rent $ 20,000 Salaries $ 110,000 Utilities $ 10,000 Insurance $ 5,000 Depreciation $ 18,000 Insurance is paid on an annual basis , in January of each year . The company plans to purchase $ 22,000 in new equipment during October and $ 50,000 in new equipment during November ; both purchases will be for cash . The company declares dividends of $ 20,000 each quarter , payable in the first month of the following quarter .
Other relevant data is given below : Cash balance as of September 30 $ 74,000