The following data relate to the operations of Milley 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 9,800 Buildings and Equipment, net 110,885 Accounts Payable 32,550 Common Shares 100,000 Retained Earnings 30,135 a. The gross margin in 30% of sales. b. Actual and budgeted sales data are as follows: December (actual) January February March April $60,000 70,000 80,000 85,000 55,000 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 month's 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, $12,000; rent $1,800; other expenses (excluding depreciation), 8% 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: $3,000 in January and $8,000 in February. h. 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 total loan balance of $50,000. 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 a): 1. Using the data above, complete the following schedules using excel: Schedule of Expected Cash Collections Cash Sales Credit Sales Total Collections January $28,000 36,000 $64,000 February Merchandise Purchases Budget Budgeted Cost of Goods sold Add desired ending inventory January $49,000 11,200b Total needs $60,200 Less beginning inventory 9,800 Required purchases 50,400 * $70,000 sales*70%-$49,000 $80,000*70%*20%=$11,200 February March Quarter March Quarter Schedule of Expected Cash Disbursements: Merchandise Purchases December Purchases January Purchases February Purchases January $32,550 12,600 February $37,800 March Purchases Total Disbursements $45,150 Beginning balance of accounts payable March Quarter $32,550 50,400 Schedule of Expected Cash Disbursements: Selling and Administrative Expenses Commissions Rent Other Expenses Total Disbursements January $12,000 1,800 5,600 $19,400 February March Quarter Cash Budget January February March Quarter Cash balance, beginning $6,000 Add cash collections 64,000 Total cash available 70,000 For inventory 45,150 For operating expenses 19,400 For equipment 3,000 Total cash disbursements 67,550 Excess (deficiency) of cash Financing: $2,450 Etc. 2. Prepare an absorption costing income statement for the quarter ended March 31. 3. Prepare a balance sheet as at March 31. Required part b): 1) Imagine the COVID-19 pandemic had started in December (the month preceding the schedules you completed in part a) 2018. Milley Manufacturing now estimates that sales (in units and dollars) will be 40% less than originally anticipated for January, 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 75% 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)