The following trial balance was drawn from the records of Fanning Company as of October 1, year 2. Cash $ 18,500 Accounts receivable 65,000 Inventory 42,500 Store equipment 250,000 Accumulated depreciation $ 77,800 Accounts payable 74,500 Line of credit loan 150,000 Common stock 55,000 Retained earnings 18,700 Totals $ 376,000 $ 376,000 Required a-1. Based on the following information, prepare a sales budget and a schedule of cash receipts for October, November, and December. Sales for October are expected to be $205,000, consisting of $45,000 in cash and $160,000 on credit. The company expects sales to increase at the rate of 20 percent per month. All accounts receivable are collected in the month following the sale. a-2. Based on the following information, prepare a purchases budget and a schedule of cash payments for inventory purchases for October, November, and December. The inventory balance as of October 1 was $42,500. Cost of goods sold for October is expected to be $74,500. Cost of goods sold is expected to increase by 20 percent per month. The company expects to maintain a minimum ending inventory equal to 30 percent of the current month cost of goods sold. Seventy-five percent of accounts payable is paid in the month that the purchase occurs; the remaining 25 percent is paid in the following month. a-3. Based on the following selling and administrative expenses budgeted for October, prepare a selling and administrative expenses budget for October, November, and December. Sales commissions (10% increase per month) $ 7,400 Supplies expense (10% increase per month) 1,900 Utilities (fixed) 2,700 Depreciation on store equipment (fixed) 2,100 Salary expense (fixed) 36,500 Rent (fixed) 6,500 Miscellaneous (fixed) 1,500 Cash payments for sales commissions and utilities are made in the month following the one in which the expense is incurred. Supplies and other operating expenses are paid in cash in the month in which they are incurred. 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. c. Indicate whether Fanning will need to borrow money during October by preparing October's Cash Budget