prepare cash budget, income statement and balance sheet.

The following data relate to the operations of Milley Corporation, and wholesale distributor of durable hats with hidden pockets that are popular for adventure travel. The hats are sold in travel boutiques and department stores nationwide. Current assets as of December 31: Cash Accounts Receivable Inventory Buildings and Equipment, net Accounts Payable Common Shares Retained Earnings $6,000 36,000 9,800 110,885 32,550 100,000 30,135 a. The gross margin in 30% of sales. b. Actual and budgeted sales data are as follows: December (actual) January February March April $60,000 70,000 80,000 85,000 55,000 C. Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales. d. Each month's ending inventory should equal 20% of the following month's budgeted cost of goods sold. e. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory. f. Monthly expenses are as follows: commissions, $12,000; rent $1,800; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter. g. Equipment will be acquired for cash: $3,000 in January and $8,000 in February h. Management would like to maintain a minimum cash balance of $5,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a March Quarter Cash balance, beginning Add cash collections Total cash available For inventory For operating expenses For equipment Total cash disbursements Excess (deficiency) of cash Financing: Etc. Cash Budget January February $6,000 64,000 70,000 45,150 19,400 3,000 67,550 $2,450 2. Prepare an absorption costing income statement for the quarter ended March 31. 3. Prepare a balance sheet as at March 31. total loan balance of $50,000. The interest rates on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter