Waterways Corporation is preparing its budget for the coming year. 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process. Waterways likes to keep 10% of the next month's unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31,2019 , totaled $181,800. Direct materials cost 80 cents per pound. Two pounds of direct materials are required to produce each unit. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Raw Materials on December 31,2019 . totaled 11,220 pounds. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid in the monthafter purchase. Accounts Payable on December 31, 2019, totaled $102,605. Direct Labor Labor requires 12 minutes per unit for completion and is paid at a rate of $9 per hour. Other Information The Cash balance on December 31,2019 , totaled $98,000, but management has decided it would like to maintain a cash balance of at least $700.000 beginning on January 31. 2020. Dividends are paid each month at the rate of $2.60 per share for 4.980 shares outstanding. The company has an open line of credit with Romney's Bank. The terms of the agreement requires borrowing to be in $1.000 increments at 9% interest. Waterways borrows on the first day of the month and repays on the last day of the month. A $520.000 equipment purchase is planned for February. January 89760 89760