Given the assumptions below concerning the Brown's Company, construct the income statement, balance sheet and cash inflow-outflow statement for the company for the month ofMARCH.

ASSUMPTIONS:

• Initial investment (made on January 1 when company begins operations) = $900,000
• Selling price = $125 per unit; COGS = $80 per unit; Fixed costs = $30,000 per month; tax rate = 15%
• Credit policy = net 40 days (assume 70% of sales are on credit and 30% of sales are for cash)-all sales are eventually collected, meaning there is no bad debt.

oSince sales in January = 5000 units (see below), collections of cash sales in January will be (.30)(5000)($125) = $187,500; collections of credit sales will be $0 since the ACP is greater than 30 days. And, accounts receivable on the January B/S will be (.70)(5000)($125) = $437,500 (i.e., all sales to date that have not yet been collected).

• Inventory policy = 10-day supply

oNote that this means inventory at the end of the month will be 10/30 of sales for that month. Thus,

given that January sales = 5,000 units (see below), January ending inventory will be 1666.67 units; inventory is carried at cost (i.e., at $80 per unit), thus January inventory on the balance sheet = 133,333 - round all values to nearest whole number (thus, round $133,333.33 to $133,333).

• All bills are paid immediately (this implies that accounts payable and accruals = $0).
• Dividends = $20,000 per month; There are 30 days in every month; All revenues, costs, cash inflows and cash outflows are evenly distributed through the month
• If additional funds are needed, these will be in the form of debt (i.e., bank loans). The company will borrow money if cash = $0 on the balance sheet. The amount borrowed will be what is necessary to balance the balance sheet with cash = $0.
• Monthly Sales: January = 5,000 units, February = 9,000 units, March = 15,000 units

15. Net income in March = ____________.

16. Addition to retained earnings in March = ____________.

17. Accounts receivable in March = ____________.

18. Debt in March = ____________.

19. Collection of cash sales + collection of credit sales in March = ____________.

20. Net cash flow in March = ____________.