Kilo-cone is an ice-cream store that sells 1kg ice cream cones, and has the following information:

Estimated monthly Sales (in cones)

January to March: 45,000 per month

April to September: 70,000 per month

October to December: 20,000 per month

Ice cream cones sell for $1 each from January 1^st to March 31^st, and $3 each during the rest of the year. Half of the sales are paid in cash, and the other half is on account. 90% of the sales on account are collected in the current quarter, and the remaining 10% of credit sales are collected in the following quarter.

Purchases and Inventory

Each cone requires 1kg of ice cream and 1 cone. Ice cream cost $14 for a 10kg tub and cones cost $10 for a box of 100 cones. All purchases are made on credit. Half of the purchases are paid for in the quarter of the purchase, and the other half is paid in the following quarter. (For simplicity, assume that the inventory has the same proportion of cones and ice-cream on hand.)

At the end of each quarter, they plan on having enough inventory on hand to cover of the sales for the next quarter.

Expenses and Disbursements

Labour: Salary costs are $52,000 for the year, or $13,000 per quarter. (For simplicity, assume that there are no salary accurals.)

Fixed expenses are expected to be $2,500 per month (Rent of $1,000 and depreciation of $1,500). Rent is paid at the beginning of each month.

The accounts payable at December 31 2019 was paid in full on January 312020.

Dividends

$340,000 of dividends are declared and paid on June 30^th, and $260,000 of dividends are declared and paid on September 30^th.

Line of Credit

The store has a line of credit that they can borrow from time to time. Funds are borrowed/repaid in increments of $1,000. Interest payments are on the 1^st day of the following quarter. For example, interest for the period January 1^st to March 31^st is due April 1^st. Interest is 3% per quarter.

Any extra cash is first used to pay off the line of credit. Assume that advances occur on the first day of each quarter, and repayments occur on the last day of each quarter.

Cash

At the end of each quarter, the minimum cash balance is $1,000.

Beginning Balances at January 1, 2020

Cash $ 1,000

Inventory 5,000

Accounts Receivable 5,000

Equipment 180,000

Accumulated Depreciation (70,000)

Total Assets 121,000

Accounts Payable $22,000

Line of Credit 0

Retained Earnings 99,000

Total Liabilities and Equity 121,000

REQUIRED:

1. Prepare a cash flow schedule by that shows how much cash is on hand at the end of each quarter of 2020. Show all relevant calculations and supporting schedules by fiscal quarter.
2. Prepare a balance sheet at December 31 2020.
3. Prepare an income statement for the year ending December 31 2020.