Problem 1

The January 31, 2020 balance sheet of Shelpat Corporation follows: Cash 8,000 Accounts receivable (net of allowance for uncollectible accounts of 2,000) 38,000 Inventory 16,000 PPE (net of allowance for accumulated depreciation of 60,000) 40,000 102,000 Accounts payable 82,500 Ordinary shares 50,000 Retained earnings (deficito (30,500) 102,000 Additional information: o Sales are budgeted as follows: February 110,000 March 120,000 o Collections are expected to be 60% in the month of sale, 38% the next month, and 2% uncollectible. The gross margin is 25% of sales. Purchases each month are 75% of the next month's projected sales. The purchases are paid in full the following month. o Other expenses for each month, paid in cash, are expected to be 16,500. Depreciation each month is 5,000