Prepare:

1. Budgeted income statement for the entire first quarter (not for each month). 2. Budgeted balance sheet as of March 31, 2018

a. Kendal Co.'s single product is purchased for S20 per unit and resold for $58 per unit. The expected inventory level of 5,250 units on December 31, 2017, is more than management's desired level for 2018, which is 20% of the next month's expected sales (in units). Expected sales are: January, 7,500 units; February, 9,500 units; March, 11,250 units; and Apl, 9,500 units.

b. Cash sales and credit sales represent 30% and 70%, respectively, of total sales. Of the credit sales, 66% is collected in the first month after the month of sale and 34% in the second month after the month of sale. For the December 31, 2017, accounts receivable balance, $120,000 is collected in January and the remaining S400,000 is collected in February

c. Merchandise purchases are paid for as follows: 20% in the first month after the month of purchase and 80% in the second month after the month of purchase. For the December 31, 2017, accounts payable balance, $90,000 is paid in January and the remaining $290,000 is paid in February.

d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $60,000 per year

e. General and administrative salaries are S132,000 per year. Maintenance expense equals S1,800 per month and is id in cash.

f. Equipment reported in the December 31, 2017, balance sheet was purchased in January 2017. It is being depreciated over eight years under the straight-line method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, S36,000; February, $95,000; and March, 30,000. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full month's depreciation is taken for the month in which equipment is purchased.

g. The company plans to acquire land at the end of March at a cost of $150,000, which will be paid with cash on the last day of the month.

h. Kendal Co. has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, and interest is paid at each month-end based on the beginning balance. Partial or full payments on these loans can be made on the last day of the month. The company has agreed to maintain a minimum ending cash balance of $41,050 in each month.

i. The income tax rate for the company is 34%. Income taxes on the first quarter's income will not be paid until April 15.

Near end of 2017, the management of Kendall Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2017 KENDALL COMPANY Estimated Balance Sheet December 31, 2017 Assets Cash Accounts Receivable Liabilities and Equity Bank load payable Taxes payable (due $36,500 Accounts payable 380000 520000 15000 105000 3/15/2017) 661500 Total liabilities Inventory Total current assets Equipment Less accumulated depreciation 91000 486000 536000 Common stock 473500 67000 Retained earnins 171000 Total stockholders' equity 644500 Total assets 1130500 Total liabilities and equity 1130500