The following trial balance was drawn from the records of Havel Company as of October 1, year 2.

Cash	$	16,000
Accounts receivable		60,000
Inventory		40,000
Store equipment		200,000
Accumulated depreciation					$	76,800
Accounts payable						72,000
Line of credit loan						100,000
Common stock						50,000
Retained earnings						17,200
Totals	$	316,000			$	316,000

Part A

	October	November	December
Sales Budget
Cash sales	$40,000	$44,000	$48,400
Sales on account	140,000	154,000	169,400
Total budgeted sales	$180,000	$198,000	$217,800
Schedule of Cash Receipts
Cash sales	$40,000	$44,000	$48,400
Collections from accounts receivable	60,000	140,000	154,000
Total cash collections	$100,000	$184,000	$202,400

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Inventory Purchases Budget
	October	November	December
Budgeted cost of goods sold	$72,000	$79,200	$87,120
Plus: Desired ending inventory	14,400	15,840	17,424
Inventory needed	86,400	95,040	104,544
Less: Beginning inventory	40,000	14,400	15,840
Required purchases (on account)	$46,400	$80,640	$88,704
Schedule of Cash Payments
Payment of current months' accounts payable	$34,800	$60,480	$66,528
Payment for prior month's accounts payable	72,000	11,600	20,160
Total budgeted payments for inventory	$106,800	$72,080	$86,688

	October	November	December
Sales commissions	$7,200	$7,920	$8,712
Supplies expense	1,800	1,980	2,178
Utilities	2,200	2,200	2,200
Depreciation on store equipment	1,600	1,600	1,600
Salary expense	34,000	34,000	34,000
Rent	6,000	6,000	6,000
Miscellaneous	1,000	1,000	1,000
Total S&A expenses	$53,800	$54,700	$55,690

b. Supply the missing information in the following pro forma income statement and balance sheet for the fourth quarter of year 2. The statements are prepared as of December 31, year 2

Income Statement
Sales revenue
Cost of goods sold
Gross margin	357,480
Operating expenses
Operating income	193,290
Interest expense	(2,530)
Net income	$190,760

Balance Sheet
Assets
Cash		$9,760
Accounts receivable
Inventory
Store equipment	$200,000
Accumulated depreciation store equipment
Book value of equipment		118,400
Total assets		$314,984
Liabilities
Accounts payable
Utilities payable
Sales commissions payable
Line of credit		23,936
Equity
Common stock		50,000
Retained earnings
Total liabilities and equity		$314,984

c. Indicate whether Havel will need to borrow money during October by preparing October's Cash Budget. (Negative amounts should be indicated by a minus sign.)

Cash Budget for October
Beginning cash balance
Cash available	0
Less: Payments
Total budgeted payments	0
Cash surplus (shortage)
Will Havel need to borrow money during October?