Artero Corporation is a traditional toy products retailer that recently also started an Internet- based subsidiary that sells toys online. A markup is added on goods the company purchases from manufacturers for resale. Swen Artero, the company president, is preparing for a meeting with Jennifer Brown, a loan officer with First Banco Corporation, to review year end financing requirements. After discussions with the companys marketing manager, Rolf Eriksson, and finance manager, Lisa Erdinger, sales over the last three months of 2020 are forecasted to be:

Month Sales Forecast

Ocrober 2020 $ 1000

November $ 1500

December $ 3000

Arteros balance sheet as of the end of September, 2020 was as follows.

Balance Sheet as of September 30 , 2020

Cash $50 Accounts payable $0

Accounts receivable 700 Notes payable 800

Inventories 500 long term debt 400

Net fixed assets 750 total liabilities 1200

Equity 800

Total assets 2000 total 2000

All sales are made on credit terms of net 30 days and are collected the following month and no bad debts are anticipated. The accounts receivable on the balance sheet at the end of September thus will be collected in October. The October sales will be collected in November, and so on. Inventory on hand represents a minimum operating level (or safety stock), which the company intends to maintain. Cost of goods sold average 80 percent of sales. Inventory is purchased in the month of sale and paid for in cash. Other cash expenses average 7 percent of sales. Depreciation is $10,000 per month. Assume taxes are paid monthly and the effective income tax rate is 40 percent for planning purposes.

The annual interest rate on outstanding long-term debt and bank loans (notes payable) is 12%. There are no capital expenditures planned during the period, and no dividends will be paid. The companys desired end-of-month cash balance is $80,000. The president hopes to meet any cash shortages during the period by increasing the firms notes payable to the bank. The interest rate on new loans will be 12 perce

Prepare both a monthly cash budget and pro forma statements of cash flows for October, November, and December 2020.