The small appliance division of Ontario Products Company Ltd., an electrical retail chain, had the following budgeted income statement for December 2008: Sales (8,000 units) $720.000 Cost of goods sold 432,000 Gross margin 288,000 Operating costs Rent expense. $ 30,000 Insurance expense 3,000 Amortization expense. 15,000 Salaries expense 100,000 Bad debt expense 3,000 Interest expense on funds borrowed by the division ... 1,000 Total operating expenses 152,000 Net operating income $136,000 "Disregard income taxes in this question Other information: 1. Actual and budgeted sales were (no change in selling price is expected): October 2008 $562,500 November 2008 $630,000 January 2009 S450,000 February 2009 $562,500 2. Company policy is to always maintain Merchandise Inventory equal to 5,000 units plus 25 percent of the following month's budgeted sales (units). 3. The company expects the following results from sales and collections of accounts receivable: 5 percent of all sales are for cash. All credit sales are on terms of 2/10, n/30. 50 percent of all credit sales are collected in the month of the sale, with 30 percent of these qualifying for the discount. 40 percent of all credit sales are collected in the month after the sale (no discounts). 4.5 percent of all credit sales are collected two months after the sale. The remainder of credit sales are uncollectible. 4. The following information is available regarding cash payments: The insurance is an annual policy purchased on June 1, 2008. Interest is on a $160,000, 5 percent note payable dated September 16, 2008, with principal and interest due in three months from that date. The company had a cash balance of $40,000 on December 1, 2008, and always maintains a minimum cash balance of at least $25,000 All purchases are paid for in the month they are made. Required 1. Prepare a merchandise purchases budget for December 2008, to show the total payments for purchases in the month. 2. Prepare a cash budget for the month of December 2008 3. How many units would the company have to sell in December in order to maintain its de sired cash level? 4. How might the cash budget help managers of the division