We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down at MetroBank." This statement by Beth Davies-Lowry, president of Intercoastal Electronics Company, concluded a meeting she had called with the firm's top management. Intercoastal is a small, rapidly growing wholesaler of consumer electronic products. The firm's main product lines are small kitchen appliances and power tools. Marcia Wilcox, Intercoastal's General Manager of Marketing, has recently completed a sales forecast. She believes the company's sales during the first quarter of 20x1 will increase by 10 percent each month over the previous month's sales. Then Wilcox expects sales to remain constant for several months. Intercoastal's projected balance sheet as of December 31, 20x0, is as follows:

Chart

Cash$50,000

Accounts receivable324,000

Marketable securities15,000

Inventory198,000

Buildings and equipment (net of accumulated depreciation)633,000

Total assets $1,220,000

Accounts payable $283,500

Bond interest payable12,500

Property taxes payable 6,000

Bonds payable (10%; due in 20x6)300,000

Common stock500,000

Retained earnings118,000

Total liabilities and stockholders' equity$1,220,000

1. Projected sales for December of 20x0 are $450,000. Credit sales typically are 80 percent of total sales. Intercoastal's credit experience indicates that 10 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month.