The Chateau Company has planned the following sales for the next three months:

January. $40,000

February $50,000

March $70,000

. Beginning cash is zero.

From past experience, the company has learned that 20% of sales are cash and 80% are credit. Credit sales are collected according to the folowing: 60 % in first for second 40%

Budgeted merchandise purchases and budgeted expenses for the first quarter are given below:

Merchandise purchases

$34,000

$35,000

$17,000

Salaries

4,000

5,000

4 .000

and wages

3,000 January

1.000 February

1.000 March

Rent payments

6,000

advertising

2.000 january

2.000february

2.000 mrach

Depreciation

1000 january

1000 febraury

1000 march

Purchases are paid in the following month, rent is paid annually at the beginning of the year, whereas, salaries and advertising expenses are paid as nowred

Calculate the gross margin to be shown on the monthly statement of profit or loss budgets for January, February and March. Show your workings.