Assume you have developed and tested a prototypeelectronic product and are about to start your new business. You purchase preprogrammedcomputer chips at $100per unit. Other component costs include plastic casingsat $20perunit and assembly hardware at $10per unit. Direct laborcosts are $20per hour and three units can be produced per hour. You intend to sell each unit at a40percent markup over the total costs of producing each unit. The plan is to produce 600product units per month in January, February, and March. Sales are expectedto be 250 units in January, 350 units in February, and 700 units in March.

Required:

a)Prepare inventoryschedule for January, February, and March.(5)

b)Calculate the grossprofitfor the first quarter of the year.(2.5)

c)Calculate the amount of accounts payable and accounts receivable to be reported in balance sheet of the company.(2.5)

d)Prepare Balance sheet of the ventureand calculate how much other short term financing is required for the venture?(5)

Cash 2000

Accrued Liabilities 3000

Fixed Assets 120000

Long term debt 20000

Owner's Equity 40000