Required information The following information applies to the questions displayed below. We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down at MetroBank." This statement by Beth Davies-Lowry, president of Intercoastal Electronics Company, concluded a meeting she had called with the firm's top management. Intercoastal is a small, rapidly growing wholesaler of consumer electronic products. The firm's main product lines are small kitchen appliances and power tools. Marcia Wilcox, Intercoastal's General Manager of Marketing, has recently completed a sales forecast. She believes the company's sales during the first quarter of 20x1 will increase by 10 percent each month over the previous month's sales. Then Wilcox expects sales to remain constant for several months. Intercoastal's projected balance sheet as of December 31, 20x0, is as follows Cash Accounts receivable Marketable securities Inventory Buildings and equipment (net of accumulated depreciation) Total assets Accounts payable Bond interest payable Property taxes payable Bonds payable (10%; due in 20x6) Common stock Retained earnings Total liabilities and stockholders' equity $ 40,000 315,000 25,000 192, 500 549,000 $1,121, 500 $ 220,500 6,250 6,000 150,000 500,000 238,758 $1,121,500 Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 20x1. In the process, the following information has been accumulated: 1. Projected sales for December of 20x0 are $500,000. Credit sales typically are 70 percent of total sales. Intercoastal's 2. Intercoastal's cost of goods sold generally runs at 70 percent of sales. Inventory is purchased on account, and 40 credit experience indicates that 10 percent of the credit sales are collected during the month of sale, and the remaino are collected during the following month. percent of each month's purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month's projected cost of goods sold. 3. Hanson has estimated that Intercoastal's other monthly expenses will be as follows: $ 35,000 Sales salaries Advertising and promotion16,000 Administrative salaries Depreciation Interest on bonds Property taxes 35,000 25,000 1,250 1,500 In addition, sales commissions run at the rate of 2 percent of sales. Required information The following information applies to the questions displayed below. We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down at MetroBank." This statement by Beth Davies-Lowry, president of Intercoastal Electronics Company, concluded a meeting she had called with the firm's top management. Intercoastal is a small, rapidly growing wholesaler of consumer electronic products. The firm's main product lines are small kitchen appliances and power tools. Marcia Wilcox, Intercoastal's General Manager of Marketing, has recently completed a sales forecast. She believes the company's sales during the first quarter of 20x1 will increase by 10 percent each month over the previous month's sales. Then Wilcox expects sales to remain constant for several months. Intercoastal's projected balance sheet as of December 31, 20x0, is as follows Cash Accounts receivable Marketable securities Inventory Buildings and equipment (net of accumulated depreciation) Total assets Accounts payable Bond interest payable Property taxes payable Bonds payable (10%; due in 20x6) Common stock Retained earnings Total liabilities and stockholders' equity $ 40,000 315,000 25,000 192, 500 549,000 $1,121, 500 $ 220,500 6,250 6,000 150,000 500,000 238,758 $1,121,500 Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 20x1. In the process, the following information has been accumulated: 1. Projected sales for December of 20x0 are $500,000. Credit sales typically are 70 percent of total sales. Intercoastal's 2. Intercoastal's cost of goods sold generally runs at 70 percent of sales. Inventory is purchased on account, and 40 credit experience indicates that 10 percent of the credit sales are collected during the month of sale, and the remaino are collected during the following month. percent of each month's purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month's projected cost of goods sold. 3. Hanson has estimated that Intercoastal's other monthly expenses will be as follows: $ 35,000 Sales salaries Advertising and promotion16,000 Administrative salaries Depreciation Interest on bonds Property taxes 35,000 25,000 1,250 1,500 In addition, sales commissions run at the rate of 2 percent of sales