Problem 5-35 Oriole Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm's marketing director, has completed the following sales forecast. Sales Month anuary February $1,000,200 August March April May June Sales Month $1,503,100 $1,503,100 $905,500 September $1,602,600 $1,602,600 $1,503,100 $1,407,800 December $1,707,000 $905,500 July $1,154,900 October $1,254,900 November Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information All sales are made on credit. Oriole's excellent record in accounts receivable collection is expected to continue, with 60% of billings collected in the month after sale and the remaining 40% collected two months after the sale Cost of goods sold, Oriole's largest expense, is estimated to equal 40% of sales dollars. Seventy percent of inventory is purchased one month prior to sale and 30% during the month of sale. For example, in April, 30% of April cost of goods sold is purchased and 70% of May cost of goods sold is purchased All purchases are made on account. Historically, 75% of accounts payable have been paid during the month of purchase, and the remaining 25% in the month following purchase Hourly wages and fringe benefits, estimated at 30% of the current month's sales, are paid in the month incurred . General and administrative expenses are projected to be $1,561,500 for the year. A breakdown of the expenses follows. All expenditures are paid monthly throughout the year, with the exception of property taxes, which are paid in four equal installments at the end of each quarter. Salaries and fringe benefits Advertising Property taxes Insurance Utilities Depreciation $ 320,000 376,300 144,600 191,800 180,100 348,700