Note: answer question 2 only

1. It is time for Jung So Min Corp. to begin its annual budget preparation for its upcoming fiscal year, which ends on December 31 2021. They are in need of temporary assistance in thar accounting office and have hired you to carry out the task of preparing the budgets. Jung So Min prepares quanerly budgets, and then from this information prepares an annual budget. To assist you in this task, Jung So Min has gathered the following information: a) Sales for the first quarter of 2021 are expected to be 6,200 units, and sales are expected to grow at a rate of 12% of the previous quarters sales for all of 2021 and 2022. Selling price is expected to remain constant at $50 per unit b) Based on past experience, sales are expected to be 30% cash sales, and 70% sales on account Jung So Min expects that 5% of the sales on account will never be collected, but the other 95% of sales on account will be collected in full in the quarter following the quarter of sale. Accounts receivable are expected to be $180,000 at the stan of the first quarter in 2021 and will be collected in full c) In order to meet expected demand at the beginning of the next quarter, Jung So Min wants ending invent01Y equal to 22% of the next quarter's budgeted sales Inventory on hand at the end of 2020 (the start of the first quaner for 2021) is expected to be 1 ,200 units. d) Jung So Min is a wholesaler and purchases its inventory from the manufacturer at a cost of $36 per unit This is the cost paid in the last quarter of 2020 and cost is expected to remain constant throughout the next five quarters. e) Jung So Min purchases from the manufacturer on account and has three weeks to pay. Accordingly, Jung So Min expects to pay 70% of its inventory purchases in the quarter of purchase, and the remaining 30% in the quarter following the quaner of purchase. Jung So Min anticipates owing $50,000 to suppliers at the start of the first quarter in 2021 f) Jung So Min incurs selling and administrative costs as follows: i) Jung So Min pays its selling staff fixed salaries plus commission. The fixed salaries total $32,000 per quarter, and the commission is 5% of sales revenue. Salaries and commissions are pad in full in the quarter the costs are incurred. ii) Adveltising costs are fixed at $6,500 per quaffer and are paid in cash. iii) Office salaries are expected to be $10,000 per quarter, again paid in cash each quarter. iv) Property taxes for 2021 are expected to be $16,000; payment is due in the third quarter and Jung So Min intends to pay the entire years assessment during that quarter. v) Utilities are expected to be constant at $3,500 per quarter. vi) The annual insurance premium is expected to be $4,500 and will be paid in the first quarter. g) Jung So Min expects to have an opening cash balance of $5,200 at the start of the first quarter of 2021 _