months and budgeted sales for the next six months follow (in pairs of earrings): January (actual) February (actual) March (actual) April (budget) May (budget) 24,000 June (budget) 30,000 July (budget) 44,000 August (budget) 69,000 September (budget) 104,000 54,000 34,000 32,000 29,000 The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $6.00 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below: Variable: Sales commissions Fixed: Rent Advertising Salaries Utilities Insurance Depreciation 4% of sales $ 400,000 $ 38,000 $ 146,000 $ 17,000 $ 5,000 $ 34,000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $26,000 in new equipment during May and $60,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $30,000 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below: