a. Gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales. d. At the end of each month, inventory is to be on hand equal to 80% of the following month's sales needs, stated at cost. e. One-half of a month's inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. The accounts payable at March 31 are a result of March purchases of inventory. f. Monthly expenses are as follows: salaries and wages, 12% of sales; rent, $5,500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $1,800 per month (includes depreciation on new assets). g. Equipment costing $2,400 will be purchased for cash in April. h. The company must maintain a minimum cash balance of $8,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month; borrowing must be in multiples of $1,000. The annual interest rate is 12%. Interest is paid only at the time of repayment of principal; figure interest on whole months (1/12, 2/12, and so forth). Required: Using the preceding data: 1. Prepare a schedule of expected cash collections. 2. Prepare a schedule of inventory purchases and a schedule of expected cash disbursements for purchases. 3. Prepare a schedule of expected cash disbursements for operating expenses. 4. Prepare a cash budget by month and for the quarter in total. (Any "Repayments" and "Interest" should be indicated by a minus sign.) 5. Prepare an income statement for the quarter ended June 30. 6. Prepare a balance sheet as of June 30. \begin{tabular}{|l|l|l|} \hline \multicolumn{1}{|c|}{ Kelly Company } \\ \hline \multicolumn{1}{|c|}{ As of June 30 } \\ \hline Current assets: & \\ \hline & & \\ \hline & & \\ \hline Total current assets & & \\ \hline & & \\ \hline & & \\ \hline Total assets & & \\ \hline & & \\ \hline Current liabilities: & & \\ \hline & & \\ \hline \multicolumn{1}{|c|}{ Liabilities and Shareholders' Equity } & \\ \hline Shareholders' equity: & & \\ \hline & & \\ \hline & & \\ \hline Total shareholders' equity & & \\ \hline \end{tabular}