Hockey Den (HD), a retailer of youth hockey sticks. The following is the HD's statement of financial position at the start of this budgeting period. Hockey DEN Statement of Financial Position September 30, 2011 Assets Cash Accounts receivable Inventory 900 unitsxS60) S 20,000 42,000 54,000 $200,000 36,000 Less accumulated depreciation Total assets 164,000 $280,000 Liabilities and Equity Liabilities $ 58,200 20,000 10,000 Accounts payable Income taxes payable (due 10/3 1/2011) Note payable to bank Shareholders' equity Share capital-ordinary Retained earnings $ 88,200 150,000 191,800 $280,000 41,800 Total liabilities and equity Equi ipment is depreciated on a straight-line basis over 10 years (residual value is $20,000) HD sold 700 hockey sticks at $100 per unit in September 2011. Aftler considering sales predictions and market conditions, HD prepares its sales budget for the next fourth month(following table). Analysis of past sales indicates that 40% of the firm's sales are for cash. The remaining 60% are credit sales, these are expected to pay in full in the month following the sales. Budgeted unit sales 1,000 $100 100 100 100 October 2011 November 2011 December 2011 January 2012 1,400 900 HD decided that the number of units in its inventory at each month-end should equal 90% of next month's predicted sales. For example, inventory at the end of October should equal 90% of budgeted November sales, and the November ending inventory should equal 90% of budgeted December sales, and so on. Also, HD's suppliers expect the September 2011 per unit cost of s60 to remain unchanged through January 2012. HD makes full payment during the month following its purchases. HD's selling expenses consist of commissions paid to sales personnel and a $2,000 monthly salary paid to the sales manager. Sales commissions equal 10% of total sales and are paid in the month sales occur HD's general and administrative expense includes salaries of $$4,000 per year, or $4,500 per month (paid cach moath when they are carned). Depreciation on equipment is computed as