more likely the sales volume falls below the budget forecast? Explain. i6C10 57 Howe Ltd. is trying to decide whether it is going to need to Hove Ltd. collects 50% of a month's sales one month after the sale and 45% two months after the sale; 5% are uncollectible. 5 take a loan in coming January to buy a new microcomputer system. The microcomputer will cost $8,800. 6. The company purchases inventory as required under terms The president, Joan Howe, has collected the following informa- of 210, net 30. It always takes the 2% discount, but records purchases at gross cost. Inventory costs $5 per unit, gross. Other expenses, all paid in cash as incurred, average about 30% of the sales dollar amount. Depreciation is part of these expenses and costs $3,000 per month. tion about her operations as at December 31: I. Balance of selected ledger accounts: $2,500 Accounts payable 6,667 7. Cash 8. 2. Sales history and forecast (unit selling price, $10): November(actual) December October (actual) (actual) (forecast) $45,000 33,000 45,000 60,000 9. Howe Ltd. keeps a minimum cash balance of $4.000 Instructions Prepare a cash budget for January, indicating whether Howe Ltd. will January 3. All sales are on credit and are due 30 days after the sale. 4. Cash payments for purchases are as follows: two-thirds in the need a loan to finance its computer acquisition. month of purchase; one-third in the month after that. C10.58 Solid State sells electronic products. The controller is 5. The cost of each unit of inventory is $20