All Eyes Security Services Company provides security monitoring services. It employs four security specialists. Each specialist works an average of 180 hours a month. The companyâs controller has compiled the information that follows.
Sixty percent of the client billings are cash sales collected during the month of sale; 30 percent are collected in the first month following the sale; and 10 percent are collected in the second month following the sale. Operating supplies are paid for in the month of purchase. Selling and administrative expenses and service overhead are paid in the month following the costâs incurrence.
The company has a bank loan of $12,000 at a 12 percent annual interest rate. Interest is paid monthly, and $2,000 of the loan principal is due on February 28. Income taxes of $2,500 for the last calendar year are due and payable on March 15. The four security specialists each earn $15 an hour, and all payroll-related employee benefit costs are included in service overhead. The company anticipates no capital expenditures for the first quarter of the coming year. It expects its cash balance on December 31 to be $15,000.
Prepare a monthly cash budget for All Eyes for the three-month period ended March31.