Universal Electric Company is a small, rapidly growing wholesaler of consumer electrical products. The f1rm"s main product lines are small kitchen appliances and power tools. Marcia Wilcox, Universal's general manager of marketing, has recently completed a sales forecast. She believes that the company's sales during the first quarter of next year will increase by 10 per cent each month over the previous month's sales. Wilcox then expects sales to remain constant for several months. Universal's projected balance sheet as at 31 December this year is as follows: Cash 33 35 000 Accounts receivable 270 000 Marketable securities 15 000 Inventory 154 000 Buildings and equipment (net of acc. depr.) 626 000 Total assets Accounts payable $176 400 Long-term loan interest payable 12 500 Property taxes payable 3 600 Long-term loan payable (10% pa.) 300 000 Share capital 500 000 Retained earnings 107 500 Total liabilities and shareholders' equity $1 100 000 Jack Hanson, the assistant accountant, is now preparing a monthly budget for the first quarter of next year. In the process, the following information has been accumulated: - Projected sales for December this year are $400 000. Credit sales typically are 75 per cent of total sales. Universal's credit experience indicates that 10 per cent of the credit sales are collected during the month of sale, and the remainder are collected during the following month. - Universal's cost of goods sold generally runs at '70 per cent of sales. Inventory is purchased on credit, and 40 per cent of each month's purchases is paid during the month of purchase. The remainder is paid during the following month. In order to have adequate inventory on hand, the firm aims to have inventory at the end of each month equal to half of the next month's projected cost of goods sold. Hanson has estimated that Universal"s other monthly expenses will be as follows: Sales salaries $18 000 Advertising and promotion 19 000 Administrative salaries 21 000 Depreciation 25 000 Interest on long-term loan 2 500 Property taxes 900 In addition, sales commissions run at the rate of l per cent of sales