Problem 1(40 points) It is currently November 1, 2020 and Krafty Kitchen Supply Corporation, a merchandising entity, is preparing a cash budget for the first two months of 2021. The following data have been forecasted: January $950,000 February $1,200,000 Sales Purchases Operating expenses: Payroll Advertising Rent Depreciation Misc. Selling & Admin 216,800 52,700 9,500 33,750 2,000 260,000 62,800 9,500 33,750 2,000 Additional data: (1) Sales are 30% cash and 70% credit each month. The collection pattern for credit sales is 20% in the month of the sale, 70% one month after the sale and 10% two months later. Total sales in December, 2020 are expected to be $1,200,000 and March 2021 sales are expected to be $820,000. (2) Cost of Goods Sold (COGS) is estimated at 65% of Sales and management expects ending inventory to equal 20% of next period's cost of goods sold. (3) Purchases are all on credit, with 50% paid in the month of purchase and the balance in the following month. Assume January 31 accounts payable is $325,000 and represents January's ending balance from purchases made on account in January. This balance will be paid in full in February. (4) Operating expenses requiring cash are paid in the month incurred. (5) The firm desires a minimum cash balance of $80,000 at the end of each month. (6) Cash Balance on January 31 is budgeted at $90,000. Required: Prepare the cash budget for February, 2021. All supporting calculations must be clearly labeled and cross referenced if covering more than one page. (Hint: prepare a cash collections schedule, purchases schedule and payment schedule for purchases first.)