Example Inc. has just closed the books for the year ending December 31, 2014. Based on the information provided, answer the questions that follow.

December 31, 2014 Balance Sheet

ASSETS		LIABILITIES AND EQUITY
Cash	$36,000	Accounts Payable	$400,000
Accounts Receivable, net	990,000	Salary Payable	125,000
Inventories ***	0	Interest Payable	90,000
Finished Goods 290,000 Raw Materials 40,000	330,000	Bank Line (7%)	110,000
Current Assets	1,356,000	Current Liabilities	725,000
		Term Debt (9%)	1,000,000
Fixed Assets, net of accumulated depreciation	1,542,600	Total Liabilities	1,725,000
		Common Stock	210,000
		Retained Earnings	963,600
		Total Equity	1,173,600
Total Assets	$2,898,600	Total Liabilities & Equity	$2,898,600

*** Inventory Finished Goods represents 20,000 units of finished goods at a cost of $14.50 per unit, Raw materials for 5,000 units at $8.00 per units, Work-in process inventory is zero at December 31.

The company is now in the process of finishing its projections for the year 2015. Historical sales for the last quarter as well as sales projections for the next thirteen months are shown below:

Month	Units Sold and Sales Price
October, 2010	(50,000 units at $20.00 each)
November, 2010	(50,000 units at $20.00 each)
December, 2010	(50,000 units at $20.00 each)
January, 2015	(50,000 units at $25.00 each)
February	(60,000 units at $25.00 each)
March	(70,000 units at $25.00 each)
April	(80,000 units at $25.00 each)
May	(95,000 units at $25.00 each)
June	(100,000 units at $25.00 each)
July	(100,000 units at $25.00 each)
August	(100,000 units at $25.00 each)
September	(102,000 units at $25.00 each)
October	(105,000 units at $25.00 each)
November	(107,000 units at $25.00 each)
December	(110,000 units at $25.00 each)
Monthly sales 2016	(110,000 units at $30.00 each)

The company has had steady sales of 50,000 units per month for the past several years, but the factory has sufficient capacity to produce 150,000 units per month, without having to invest in significant additional fixed assets.

For forecasting purposes the company assumes 25% of sales are collected the month of the sale, 45% in the subsequent month, 27% in the second month after the sale and 3% uncollectible. The percent of sales method is used for allowance for Doubtful Accounts. Bad Debts are written off each quarter.

Desired ending finished goods inventory is 20% of next month