The following data relate to the operations of lvlilley Corporation, and wholesale distributor of durable hats with hidden pockets that are popular for adventure travel. The hats are sold in travel boutiques and department stores nationwide. Current assets as of December 31: Cash $6,000 Accounts Receivable 36,000 Inventory 9,300 Buildings and Equipment, net 110,335 Accounts Payable 32,550 Common Shares 100,000 Retained Earnin 5 30,135 a. The gross margin in 30% of sales. b. Actual and budgeted sales data are as follows: December [actual] January February March Aril c. Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales. d. Each month's ending inventory should equal 20% of the following months budgeted cost of goods sold. e. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory. f. Monthly expenses are as follows: commissions, 512,000; rent 51,300; other expenses [excluding depreciation), 3% of sales. Assume that these expenses are paid monthly. Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter. g. Equipment will be acquired for cash: 53,000 in January and 53,000 in February. . Management would like to maintain a minimum cash balance of $5,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a 3' total loan balance of 550,000. The interest rates on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. Required part b): 1} Imagine the CDvID-l pandemic had started in December {the month precedingthe schedules you completed in part a} 2013. Milley Manufacturing now estimates that sales [in units and dollars] will be 40% less than originally anticipated forJanuary, February and March and hopes that normal operations will resume in April and May. As a result, the company should qualify for the Canada Emergency Wage Subsidy {Claim Period 2 which reimbursed the company for ass of its wages as long as payments to employees were not reduced and revenues declined at least 30%. Recalculate the budgets and statements from parts 1 and 2, identifying the assumptions you must make. Enter your schedules in a separate Excel worksheet in the same file as your part a]. Required part c]: 1) Provide any suggestions, recommendations, or issues for the company to consider in making their decision. So, for example, you could suggest other ideas that the company could incorporate into future iterations of the budget [it is not necessary to do more than the two versions we have already required: the first original version, and second version incorporating the Canada Emergency Wage Subsidy]. Don't be afraid to \"think outside the box": That's what companies, and all of us, have had to do! Enter your answer in a third excel worksheet, using "merge cells" to create a box large enough to display all of your answer. C D E schedule of expected cash collections as follows: Particulars Jan Feb March Quarter Cash sales 28,000.00 32,000.00 34,000.00 94,000.00 Credit sales 36.000.00 42.000.00 48,000.00 126.000.00 Total Collections 64.000.00 74.000.00 82.000.00 220.000.00C D E Merchandise Purchases budget as follows: Particulars Jan Feb March Quarter Budgeted cost of goods sold 49,000.00 56,000.00 59,500.00 164,500.00 Add: Desired ending inventory 11,200.00 11,900.00 7,700.00 30,800.00 Total needs 60,200.00 67,900.00 67,200.00 195,300.00 Less: beginning inventory (9,800.00) (11,200.00) (11,900.00) (32,900.00) Required purchases 50,400.00 56,700.00 55,300.00 162,400.00C D m F schedule of expected cash disbursements as follows: Particulars Jan Feb March Quarter March Purchases 32,550.00 32,550.00 April Purchases 12,600.00 37,800.00 50,400.00 May Purchases 14,175.00 42,525.00 56,700.00 June Purchases 13,825.00 13,825.00 45,150.00 51,975.00 56,350.00 153,475.00B C D E F G H the schedule of Expected Cash Disbursements- Selling and Administrative Expenses as follows: Particulars Jan Feb March Quarter Commissions 12,000.00 12,000.00 12,000.00 36.000.00 Rent 1,800.00 1,800.00 1,800.00 5,400.00 Other Expenses 5.600.00 6,400.00 6,800.00 18,800.00 Total Disbursements 19,400.00 20,200.00 20,600.00 60,200.00C D E F epare the cash budget as follows: Particulars Jan Feb March Quarter Cash balance, brginning 6,000.00 5,450.00 5,275.00 16,725.00 Add: receivable Collections 64,000.00 74,000.00 82,000.00 220,000.00 Total cash available 70,000.00 79,450.00 87,275.00 236,725.00 Less: Cash Disbursements Inventory (45,150.00) (51,975.00) (56,350.00) (153,475.00) Expenses (19,400.00) (20,200.00) (20,600.00) (60,200.00) Equipment (3,000.00) (8,000.00) (11,000.00) Total Cash Disbursements (67,550.00) (80,175.00) (76,950.00) (224,675.00) Excess (deficiency of cash) 2,450.00 (725.00) 10,325.00 12,050.00 Financing: Borrowings 3,000.00 6,000.00 9,000.00 Repayment (5,000.00) (5,000.00) Interest(3000*1/100*3)+(6000* 1/100*2) (210.00) (210.00) Total financing 3,000.00 6,000.00 Cash balance, ending 5,450.00 5,275.00 5,115.00 12,050.00Income Statement of P Company 5 Year ended March 31 6 Particulars Amount(S) 7 Sales(70,000+80,000+85,000) 235,000.00 8 Less: Cost of goods sold(9800+162400-7700) (164,500.00) 9 Gross Profit 70,500.00 10 Less Selling and admin expenses 11 Commissions (36,000.00) 12 Rent (5,400.00) 13 Salaries and wages (2,400.00) 14 Other exp (18,800.00) 15 Net Operating Income 7,900.00 16 Interest on loan repaid (210.00) 17 Net Income 7,690.00Prepare the balance sheet as follows: Income Statement of P Company Year ended March 31 Particulars Amount(S) Assets: Current assets Cash 5,115.00 Accounts receivable 51,000.00 Inventory 7,700.00 Total Current assets 63.815.00 Building and equipment($1 10,885+3,000+8,000-2,400) 119,485.00 Total Assets 183.300.00 Liabilities and equity Current liabilities Accounts payable 41,475.00 Loan due 4,000.00 Equity and earnings Capital Stock 100,000.00 Retained earnings($30,135+7,690) 37,825.00 Total liabilities and equity 183,300.00