Use the following information for Questions 1-7, which will appear on pages 2 and 3 of this exam.

You will use the information to prepare elements of the ABC Company Budget for the 4^th quarter (October, November, and December) of 2018.

The following balances were taken from the ABC Companys balance sheet on September 30, 2018:

Cash 25,000

Accounts Receivable 90,000

Inventory 30,000

Accounts Payable 54,000

The following information is also available and pertaining to ABC Company:

ABC sells one product that is priced at $10/unit. Sales for the months of October and November are expected to be 10,000 units, sales for December are expected to be 12,000 units, and sales for January are expected to be 9,000 units.

The company possessed 5,000 units of inventory as of September 30, 2018. They are required to have 50% of the following months projected sales available as an ending inventory. They purchase their inventory for $6/unit.

ABC pays their sales representatives a commission of 7.5% of sales. They pay their sales supervisors $3,000 per month. All salaries are paid in cash in the same month.

ABCs cash-based general and administrative expenses are $4,000 per month, and are all paid in cash in the same month. ABC has a depreciation expense of $250/month.

All sales are on credit, and all accounts receivable are collected in full during the month following the sale.

All purchases of inventory are on credit, and all accounts payable are paid in full during the month following the purchase.

The minimum cash balance that ABCs corporate policy requires is $10,000. If the monthly ending balance is below that amount, ABC must initiate a borrowing that requires a 1% monthly interest payment. As of September 30, there is no active borrowing. Excess cash balances above the minimum are to be used to repay active borrowings, if applicable.

Prepare the Selling Expense Budget for the 4^th quarter of 2018.