Burr Corp. (Burr) is a manufacturer of recycling bins. Burr's statement of financial position at December 31, 2020, is as follows: Assets Cash $ 10,000 Accounts receivable (net of $2,400 allowance) 77,600 Inventory 24,750 Prepaid expenses 1,600 113,950 Property, plant, and equipment (net) 108,000 $221.950 Liabilities and shareholders' equity Bank loan Accounts payable Income taxes payable Common shares Retained earnings $ 50,000 46,025 2.000 98.025 62,000 61.925 123.925 $221.950 Information related to 2021 is as follows: 1. Burr collects cash from 60% of its sales in the quarter in which the sale is made and 37% in the following quarter. Historically, 3% of sales are uncollectable. 2. Burt's sales are cyclical with the highest sales at the end of the year when customers stock up before the spring. Projected 2021 quarterty sales are as follows: 1st quarter $160,000 2nd quarter 160,000 3rd quarter 190,000 4th quarter 230,000 $740.000 The projected 2021 quarterty sales are based on the assumption that the bank will advance an additional $70,000 at the beginning of the first quarter to purchase replacement manufacturing equipment. Burr pays 4% interest per year on its bank loans, calculated quarterly on the opening balance. 3. Variable cost of goods sold equals 55% of sales. Variable selling and office expenses (excluding interest and taxes) amount to about 14% of the variable cost of goods sold. Burr's payments are made 65% in the quarter the expense is incurred and 35% in the following quarter. Burr Corp. (Burr) is a manufacturer of recycling bins. Burr's statement of financial position at December 31, 2020, is as follows: Assets Cash $ 10,000 Accounts receivable (net of $2,400 allowance) 77,600 Inventory 24,750 Prepaid expenses 1,600 113,950 Property, plant, and equipment (net) 108,000 $221.950 Liabilities and shareholders' equity Bank loan Accounts payable Income taxes payable Common shares Retained earnings $ 50,000 46,025 2.000 98.025 62,000 61.925 123.925 $221.950 Information related to 2021 is as follows: 1. Burr collects cash from 60% of its sales in the quarter in which the sale is made and 37% in the following quarter. Historically, 3% of sales are uncollectable. 2. Burt's sales are cyclical with the highest sales at the end of the year when customers stock up before the spring. Projected 2021 quarterty sales are as follows: 1st quarter $160,000 2nd quarter 160,000 3rd quarter 190,000 4th quarter 230,000 $740.000 The projected 2021 quarterty sales are based on the assumption that the bank will advance an additional $70,000 at the beginning of the first quarter to purchase replacement manufacturing equipment. Burr pays 4% interest per year on its bank loans, calculated quarterly on the opening balance. 3. Variable cost of goods sold equals 55% of sales. Variable selling and office expenses (excluding interest and taxes) amount to about 14% of the variable cost of goods sold. Burr's payments are made 65% in the quarter the expense is incurred and 35% in the following quarter
