The following question is quite confusing to me I dont understand how to formulate or confgure such statemnets? Hpw do I get to the point and what do I need to calculate? How do I derive the three staments? 4 5 6

Required information [The following information applies to the questions displayed below] \"We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down at MetroBank.\" This statement by Beth Davies-Lowry, president of Intercoastal Electronics Company, concluded a meeting she had called with the firm's top management. Intercoastal is a small, rapidly growing wholesaler of consumer electronic products. The firm's main product lines are small kitchen appliances and power tools. Marcia Wilcox, Intercoastal's General Manager of Marketing, has recently completed a sales forecast. She believes the company's sales during the first quarter of 20x1 will increase by 10 percent each month over the previous month's sales. Then Wilcox expects sales to remain constant for several months. Intercoastal's projected balance sheet as of December 31, 20x0, is as follows: Cash $ 45,000 Accounts receivable 432,000 Marketable securities 10,000 Inventory 264,000 Buildings and equipment (net of accumulated depreciation) 646,000 Total assets $1,397,000 Accounts payable $ 378,000 Bond interest payable 10,000 Property taxes payable 3 , 6 0 0 Bonds payable (8%; due in 20x6) 300,000 Common stock 500,000 Retained earnings 205,400 Total liabilities and stockholders' equity $1,397,000 Jack Hanson, the assistant controller, is now preparing a monthly budget for the rst quarter of 20x1. In the process, the following information has been accumulated: 1. Projected sales for December of 20x0 are $600,000. Credit sales typically are 80 percent of total sales. Intercoastal's credit experience indicates that 10 percent of the credit sales are collected during the month of sale. and the remainder are collected during the following month. 2. Intercoastal's cost of goods sold generally runs at 80 percent of sales. Inventory is purchased on account, and 25 percent of each month's purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the rm attempts to have inventory at the end of each month equal to half of the next month's projected cost of goods sold. 3. Hanson has estimated that Intercoastal's other monthly expenses will be as follows: Sales salaries $ 17,000 Advertising and promotion 16,000 Administrative salaries 17,000 Depreciation 30,000 Interest on bonds 2,000 Property taxes 900 [ In addition, sales commissions run at the rate of2 percent of sales. 4. Intercoastal's president, Davies-Lowry, has indicated that the rm should invest $105,000 in an automated inventory- handling system to control the movement of inventory in the firm's warehousejust after the new year begins. These equipment purchases will be financed primarily from the firm's cash and marketable securities. However, Davies-Lowry believes that Intercoastal needs to keep a minimum cash balance of $40,000. If necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Hanson believes short-term interest rates will be 10 percent per year at the time ofthe equipment purchases. If a loan is necessary, Davies-Lowry has decided it should be paid off by the end of the rst quarter if possible. 5. Intercoastal's board of directors has indicated an intention to declare and pay dividends of $25,000 on the last day of each quarter. 6. The interest on any short-term borrowing will be paid when the loan is repaid. Interest on lntercoastal's bonds is paid semiannually on January 31 and July 31 for the preceding six-month period. 7. Property taxes are paid semiannually on February 28 and August 31 for the preceding six-month period. 4. Cash disbursements budget: Inventory purchases: Cash payments for purchases during the current month Cash payments for purchases during the preceding month Total cash payments for Inventory purchases Other expenses: 5. Complete the first three lines of the summary cash budget. Then do the analysis of short-term nancing needs in requirement (6). Then finish requirement (5). Cash receipts (from part 2) Less: Cash disbursements (from part 4) Change in cash balance during period due to operations Sale of marketable securities (1/2/x1) Proceeds from bank loan (1/2/x1) Purchase of equipment Repayment of bank loan (3/31/x1) Interest on bank loan Payment of dividends Change in cash balance during rst quarter Cash balance. 1/1/x1 Cash balance. 3/31/x1 6. Calculation of required short-term borrowing. Projected cash balance as of December 31, 20x0 Less: Minimum cash balance Cash available for equipment purchases Projected proceeds from sale of marketable securities Cash available Less: Cost of investment in equipment Required short-term borrowing