Davis Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm's marketing director, has completed the following sales forecast. Month Sales Month Sales $1,501,000 $1,501,000 $903,800 July anuary February $1,001,200 August March 903,800 September $1,604,500 $1,604,500 $1,252,100 November $1,501,000 1,700,900 1,150,300 October May une $1,407,500 December Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information. All sales are made on credit. Davis's excellent record in accounts receivable collection is expected to continue, with 60% of billings collected in the month after sale and the remaining 40% collected two months after the sale Cost of goods sold, Davis's largest expense, is estimated to equal 40% of sales dollars. Seventy percent of inventory is purchased one month prior to sale and 30% during the month of sale. For example, in April, 30% of April cost of goods sold is purchased and 70% of May cost of goods sold is purchased All purchases are made on account. Historically, 75% of accounts payable have been paid during the month of purchase, and the remaining 25% in the month following purchase Hourly wages and fringe benefits, estimated at 30% of the current month's sales, are paid in the month incurred General and administrative expenses are projected to be $1,565,600 for the year. A breakdown the expenses follows. All expenditures are paid monthly throughout the year, with the exception of taxes, which are paid in four equal installments at the end of each quarter Salaries and fringe benefits Advertising Property taxes Insurance Utilities Depreciation Total 323,800 374,300 145,100 194,600 178,400 349,400 1,565,600 Operating income for the first quarter of the coming year is projected to be $323,100. Davis is subject to a 40% tax rate. The company pays 100% of its estimated taxes in the month following the end of each quarter . Davis maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at the end of the month, the company borrows against its 12% line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $50,300