b$.$ Actual sales for December and budgeted sales for the next four months are as

follows:c$.$ Sales are $20\%$ for cash and $80\%$ on credit. All payments on credit sales are

collected in the month following sale. The accounts receivable at December $31$

are a result of December credit sales.

d$.$ The company's gross margin is $40\%$ of sales.

e$.$ Monthly expenses are budgeted as follows: salaries and wages, $$27,000$ per

month; advertising, $$70,000$ per month; shipping, $5\%$ of sales; depreciation,

$$14,000$ per month; other expenses, $3\%$ of sales.

f$.$ At the end of each month, inventory is to be on hand equal to $25\%$ of the

following month's sales needs, stated at cost$.$

g$.$ 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.

h$.$ During February, the company will purchase a new copy machine for $$1,500$

cash. During March, other equipment will be purchased for cash at a cost of

$$84,500.$

i$.$ During January, the company will declare and pay $$45,000$ in cash dividends.

j$.$ The company must maintain a minimum cash balance of $$30,000.$ An open

line of credit is available at a local bank for any borrowing that may be needed

during the quarter. All borrowing is done at the beginning of a month, and all

repayments are made at the end of a month. Borrowings and repayments of

principal must be in multiples of $$1,000.$ Interest is paid only at the time of

payment of principal. The annual interest rate is $12\%.($Figure interest on

whole months, e$.$g$.,1/12,2/12.)$

Required:

Using the preceding data, complete the following statements and schedules for

the first quarter:

Schedule of expected cash collections.

a$.$ Inventory purchases budget.

b$.$ Schedule of cash disbursements for purchases.

Schedule of cash disbursements for expenses.

Cash budget.

Income statement for the quarter ending March $31$ as shown in Schedule $9$ in

the chapter.

Balance sheet as of March $31.$