Please Explain

Required Information [The following information applies to the questions displayed below] "We realiy need to get this new material-handiling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securitles, but if necessary we can get a short-term loan down at MetroBank." This statement by Beth Davies-Lowry, president of Intercosstal Electronics Company, concluded a meeting she had called with the firm's top management. Intercoastal is a small, rapldly growing wholesaler of consumer electronic products. The firm's main product lines are small kitchen appliances and power tools. Marcla Wilcox. Intercoastal's General Manager of Marketing, has recently completed a sales forecast. She belleves the company's sales during the first quarter of 201 will Increase by 10 percent each month over the previous month's sales. Then Wicox expects sales to remain constant for several months. Intercoastal's projected balance sheet as of December 31,200, is as follows: Jack Hanson, the assistant controller. Is now prepanng a monthly budget for the first quarter of 201. In the process, the following information has been accumulated: 1. Projected sales for December of 200 are $500,000. Credit sales typically are 70 percent of total sales. Intercoastal's credit experience indicates that 20 percent of the credit sales are collected curing the month of sale, and the remainder are collected during the following month. 2. Intercoastal's cost of goods sold generally runs at 70 percent of sales. Inventory is purchased on account, and 50 percent of each month's purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequste stocks of Inventory on hand, the firm attempts to have Inventory at the end of each month equal to half of the next month's projected cost of goods sold. 3. Hanson has estumated that Intercoastal's other monthly expenses vall be as follows: In adidition, sales commissions run at the rate of 3 percent of sales. 4. Intercoastal's president, Davles-Lowry, has indicated that the firm should Invest $100,000in an automated inventoryhandling system to control the movement of Imventory in the firm's warehouse just after the new year begins. These equipment purchases will be financed primarly from the tirm's cash and marketable securities. However, Davles-Lowry belleves that intercoastal needs to keep a minimum cash balance of $15,000. If necessary, the remainder of the equipment purchases vall be financed using short-term credit from a local bonk. The minimum period for such a losn is three months. Hanson believes short-term interest rates will be 10 percent per year at the ume of the equipment purchases. If a loan is necessary, Davies-Lowry has decided it should be paid off by the end of the first quarter if possible. 5. Intercoastal's board of directors has indicated an intention to declare and pay dividends of $75,000 on the last day of each quarter. 6. The Interest on any short-term borrowing will be paid when the loon is repold. Interest on Intercosstal's bonds is pald semiannusily on Januery 31 and July 31 for the preceding slx-month period. 7. Property taxes are paid semiannually on February 28 and August 31 for the preceding six-month period. Required: Prepare Intercoastal Electronics Company's master budget for the first quarter of 201 by completing the following schedules and statements. 9. Prepare Intercoastal Electronics' budgeted balance sheet as of March 31, 20x1. (Hint: On March 31, 20xi, Bond Interest Payable is $3,000 and Property Taxes Payable is $1,200.) (Round your answers to the nearest whole doller.) Required Information [The following information applies to the questions displayed below] "We realiy need to get this new material-handiling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securitles, but if necessary we can get a short-term loan down at MetroBank." This statement by Beth Davies-Lowry, president of Intercosstal Electronics Company, concluded a meeting she had called with the firm's top management. Intercoastal is a small, rapldly growing wholesaler of consumer electronic products. The firm's main product lines are small kitchen appliances and power tools. Marcla Wilcox. Intercoastal's General Manager of Marketing, has recently completed a sales forecast. She belleves the company's sales during the first quarter of 201 will Increase by 10 percent each month over the previous month's sales. Then Wicox expects sales to remain constant for several months. Intercoastal's projected balance sheet as of December 31,200, is as follows: Jack Hanson, the assistant controller. Is now prepanng a monthly budget for the first quarter of 201. In the process, the following information has been accumulated: 1. Projected sales for December of 200 are $500,000. Credit sales typically are 70 percent of total sales. Intercoastal's credit experience indicates that 20 percent of the credit sales are collected curing the month of sale, and the remainder are collected during the following month. 2. Intercoastal's cost of goods sold generally runs at 70 percent of sales. Inventory is purchased on account, and 50 percent of each month's purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequste stocks of Inventory on hand, the firm attempts to have Inventory at the end of each month equal to half of the next month's projected cost of goods sold. 3. Hanson has estumated that Intercoastal's other monthly expenses vall be as follows: In adidition, sales commissions run at the rate of 3 percent of sales. 4. Intercoastal's president, Davles-Lowry, has indicated that the firm should Invest $100,000in an automated inventoryhandling system to control the movement of Imventory in the firm's warehouse just after the new year begins. These equipment purchases will be financed primarly from the tirm's cash and marketable securities. However, Davles-Lowry belleves that intercoastal needs to keep a minimum cash balance of $15,000. If necessary, the remainder of the equipment purchases vall be financed using short-term credit from a local bonk. The minimum period for such a losn is three months. Hanson believes short-term interest rates will be 10 percent per year at the ume of the equipment purchases. If a loan is necessary, Davies-Lowry has decided it should be paid off by the end of the first quarter if possible. 5. Intercoastal's board of directors has indicated an intention to declare and pay dividends of $75,000 on the last day of each quarter. 6. The Interest on any short-term borrowing will be paid when the loon is repold. Interest on Intercosstal's bonds is pald semiannusily on Januery 31 and July 31 for the preceding slx-month period. 7. Property taxes are paid semiannually on February 28 and August 31 for the preceding six-month period. Required: Prepare Intercoastal Electronics Company's master budget for the first quarter of 201 by completing the following schedules and statements. 9. Prepare Intercoastal Electronics' budgeted balance sheet as of March 31, 20x1. (Hint: On March 31, 20xi, Bond Interest Payable is $3,000 and Property Taxes Payable is $1,200.) (Round your answers to the nearest whole doller.)