Flit Co is preparing a cash flow forecast for the three$-$month period from January to the end of March. The following sales volumes have been forecast:

DECEMBER JANUARY FEBRUARY MARCH APRIL

SALES $($UNITS$)1,2001,2501,3001,4001,500$

NOTES:

$$ The selling price per unit is $$800$ and a selling price increase of $5\%$ will occur in February. Sales are all on one month$$s credit.

$$ Production of goods for sale takes place one month before sales.

$$ Each unit produced requires two units of raw materials, costing $$200$ per unit. No raw materials inventory is held. Raw material purchases are on one months$$ credit.

$$ Variable overheads and wages equal to $$100$ per unit are incurred during production, and paid in the month of production.

$$ The opening cash balance at $1$ January is expected to be $$40,000.$

$$ A long$-$term loan of $$300,000$ will be received at the beginning of March.

$$ A machine costing $$400,000$ will be purchased for cash in March.

Required:

a$)$ Calculate the cash balance at the end of each month in the three$-$month period.

b$)$ Calculate the forecast current ratio at the end of the three$-$month period.