Question 2: Mahendra Toys is a wholesale distributor of gifts and accessories. The following data relates to their balance sheet as of 31 December 2020. Current Assets Cash $ 8,000 Accounts Receivable $ 42,000 Inventory $ 10,200 Building and equipment, Net* $136,000 Total Assets $196,200 Current Liabilities Accounts Payable $ 30,200 Common Shares $120,000 Retained Earnings $ 46,000 Total Liabilities & Owner's Equity $196,200 a. The gross margin for the company is 30% of sales. b. Actual and budgeted sales data are as follows - January $75,000 February $85,000 March $95,000 April $70,000 C. Sales are 20% in cash and 80% in credit. Credit sales are collected in the month following the sale. d. Each month's ending inventory should be 20% of the following month's budgeted cost of goods sold. e. 30% of the month's inventory purchases are paid for in the month of purchase; the remaining 70% is paid for in the following month. f. Monthly expenses are as follows: salaries, $10,000; rent, $6,000; advertisements, $2,000; other expenses (excluding depreciation), 15% of sales. Depreciation is $4,000 for the quarter and includes depreciation on new assets acquired during the quarter. 8. Equipment will be acquired for cash: $6,000 in January and $8,000 in March. h. Management would like to maintain a minimum cash balance of $6,000 at the end of each month. Assume the company can borrow at 0% interest and they do not pay any income tax. All borrowing occurs at the beginning of a month. The company will, as far as it is able, repay outstanding loans at the end of each month 2. Prepare a budgeted income statement for the first three months of 2021 and a budgeted balance sheet as of March 31, 2021 [ 7 Marks]