Stay Fresh Company is a merchandising company that sells plastic food containers. The president and chief financial officer of the company want to approach Stay Fresh s bank about short-term financing for the coming year 2014. The bank stated that loans are given only after reviewing proper cash budgeting information. The loan officer is requesting a detailed cash budget that shows the quarters in which financing will be needed as well as the amounts that will be needed and the quarters in which repayments can be made. The following information has been assembled to assist in preparing the cash budget for 2010:a. Budgeted sales and merchandise purchases for 2014 as well as actual sales and purchases for the last quarter of 2013 are as follows: Merchandise Sales Purchases 2013: Fourth quarter actual $ 600000 $360000 2014: First quarter estimated $ 800000 $520000 Second quarter estimated $1000000 $620000 Third quarter estimated $1200000 $740000 Fourth quarter estimated $ 960000 $480000b. The company generally collects 40% of a quarter s sales before the quarter ends and theremaining 60% in the following quarter.c. 30% of a quarter s merchandise purchases are paid for within the quarter. The remainder is paid in the following quarter.d. Operating expenses for 2014 are budgeted at $200000 per quarter plus 10% of sales. Of the fixed amount $20000 each quarter is depreciation.e. The company will pay $10000 in cash dividends each quarter.f. Equipment purchases will be made as follows: $100000 in the second quarter and $135000 in the third quarter.g. The cash balance on December 31 2013 is $40000. The company must maintain a minimum cash balance of at least $36000.h. The company has an agreement with a local bank that allows the company to borrow in increments of $10000 at the beginning of each quarter up to a total loan balance of $200000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would as far as able repay the loan plus accumulated interest at the end of the year.i. At present the company has no loans outstanding.Instructions1. Prepare the following by quarter and in total for 2014:a. A schedule of expected cash collections on sales.b. A schedule of expected cash disbursements for merchandise purchases;2. Compute the expected cash disbursements for operating expenses by quarter and in total for 2014.3. Prepare a cash budget by quarter and in total for 2014.