Required: 1. Prepare a sales budget for the first quarter (Q1) and the first quarter in total. The selling price per unit is $50.00. Budgeted sales in units would be: December of the previous year January February March April 80,000 60,000 80.000 100.000 Past experience shows that 45% of sales are collected in the month of the sale, and 55% in the month following the sale. 2. Prepare a purchases budget for January through March, and the first quarter in total. Assume that the company only sells one product that can be purchased at $35.00 per unit. The market for this product is very competitive and customers highly value service such as quality and on time delivery of the product. Also assume that currently it is company policy that ending inventory should equal 45% of next month's projected sales. All costs are paid in the current month except inventory purchases, which are paid in the month following the purchase (i.e. January purchases are paid in February). Budgeted sales in units would be: December of the previous year January February March April 70,000 80,000 60,000 80,000 100,000 3. Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $70,000, and this was the balance in the cash account on January 14 Other expenses include $35,000 per month for rent, $24,000 per month for advertising, and $66,000 per month for depreciation. In addition, variable Selling & Administrative cost is $12 per unit sold, and the company paid a $20,000 dividend in February. The company has an open line of credit with a bank and can borrow at an annual rate of 12%. For simplification assume that all loans are made at the beginning of the month when borrowing is needed, and repayments are made at the end of a month if there is enough cash to make the payment. Also, interest associated with a loan is only paid at the time when that loan or a portion thereof is paid. Additionally, all loans and repayments (not the interest portion) can only be made in increments of $1000 and the company would like to pay its debts, or a portion thereof, as soon as it has enough cash to do so. Budgeted sales in units would be: December of the previous year 70,000 January 80,000 February 60,000 March 80,000 April 100,000 4. Prepare the Budgeted Income Statement based on the information given above. Label the budgets prepared in Steps 1-4 as budget scenario A. 5. Repeat steps 2-4 for budget scenarios B and C using the following Desired Ending Inventory assumptions: B. C. Ending Inventory 90% 5%