TO Industries prepares monthly cash budgets. The followingbudget information is available for April and May 2019:

	April	May
Sales	$650,000	$700,000
Direct material purchases	220,000	240,000
Direct labor	175,000	180,000
Manufacturing overhead	120,000	130,000
Selling and administrative expenses	150,000	150,000

All sales are credit sales. The company expects to collect 60%from customers in the month of the sale and the remaining 40% infirst month following the sale. The company purchases directmaterials on account. The company pays for 75% of the purchases inthe month of the purchases and the remaining 25% in the first monthfollowing the purchase. Direct labor, manufacturing overhead, andselling and administrative expenses are paid in cash in the monthincurred.

Additional information:

• March 2019 credit sales were $600,000
• March 2019 purchases of direct materials were $200,000
• The company’s cash balance on April 1, 2019 is expected to be$90,000
• The company wants to maintain a minimum cash balance of $80,000and has a line of credit in the amount of 1,000,000, with an annualinterest rate of 6%, available to borrow if the budgeted cashbalance falls below that level. Any amounts borrowed on the line ofcredit at the end of a month require a cash interest payment in thesubsequent month. If the ending cash balance in a month exceeds theminimum balance, the excess amount is used to repay any amountsborrowed on the line of credit.

Required

1. Prepare a schedule of cash collections from credit sales forApril and May 2019.
2. Prepare a schedule of cash disbursements for direct materialpurchases for April and May 2019.
3. Prepare a cash budget for April and May 2019 in columnarformat.