ORIGINAL Chang Distributors, a wholesale company, is considering whether to open a new distribution center. The center would open January 1. To make the decision, the planning committee requires a master budget for the center's first quarter of operation (January, February, and March). You have been given the following information. Use it to create the cash budget for Chang Distributors for the first quarter of its operations (January, February and March). a. January sales are estimated to be $400,000 of which $100,000 will be cash and $300,000 will be credit. The company expects sales to grow 10% per month. The company expects to collect 100% of accounts receivable in the month following the sale. b. Chang plans to purchase the following amounts of inventory during the first quarter of operations: January $306,000 February 270,600 March 296,300 All inventory purchases are on account. The company pays 70% of accounts payable in the month of purchase. It pays the remaining 30% in the following month. c. Budgeted monthly selling and administrative expenses are: Salary Expense (Fixed) Sales Commissions Supplies Expense Utilities (Fixed) Depreciation on Center Equipment (Fixed Rent (Fixed) Miscellaneous (Fixed) $24,000 5% of Sales 2% of Sales $1,400 $3,600 $ 900 *The capital expenditures budget shows that Chang must purchase $100,000 of equipment on January 1 to establish the new center. The equipment supplier allows a thirty-day trial period. Chang will pay for the equipment on January 31. The equipment is expected to have a 10-year useful life and a $10,000 salvage value. Prepare selling and administrative expense budget. d. Sales commissions and utilities are paid in the month after the month in which they are incurred. All other expenses are paid in the month in which they are incurred. e. Using a line of credit, Chang borrows and repays principal in increments of $1,000 on the last day of the month as needed. It pays interest of 1 percent per month in cash on the last day of the month. Company policy is to maintain an ending cash balance of at least $12,000