The following data relate to the operations of Pearl Corporation, a wholesale distributor of consumer goods:

Current assets as of December:

Cash 12,000

Accounts receivable 72,000

Inventory 19,600

Buildings and equipment, net 221,770

Accounts payable 65,100

Retained earnings 60,270

a. The gross margin is 30% of sales.

b. Actual and budgeted sales are as follows:

December (Actual) 120,000

January 140,000

February 160,000

March 170,000

April 110,000

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 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, 24,000; rent 3,600; other expenses (excluding depreciation) 8% of sales.Assume that these expenses are paid monthly.Depreciation is 4,800 for the quarter and includes depreciation on new assets acquired during the quarter.

g. Equipment will be acquired for cash: 6,000 in January and 16,000 in February.

h. Management would like to maintain a minimum cash balance of 10,000 at the end of each month.The company has an agreement with a local bank that allows the company to borrow in increments of 2,000 at the beginning of each month, up to a total loan balance of 100,000.The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded.The compounded would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:

1. Schedule of expected cash collections

2. Purchases budget

3. Budgeted payment for accounts payable/purchases

4. Schedule of disbursements for expenses other than on purchases.

5. Cash budget

6. Income statement

7. Statement of Financial position