The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $5.20 for a pair of earrings. One half of a month's purchases is paid for in the month of purchase, the other half is paid for in the following month. All sales are on credit. Only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible Monthly operating expenses for the company are given below 4% of sales Variable: Sales commissions Fixed: Advertising Rent Salaries Utilities Insurance Depreciation $320,000 $ 30,000 $ 130,000 $ 13,000 5 4,200 $ 26,000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $22,000 in new equipment during May and $52,000 in new equipment during Junie, both purchases will be for cash. The company declares dividends of $24,000 each quarter, payable in the first month of the following quarter The company's balance sheet as of March 31 is given below