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 Wicox, Intercoastal's General Manager of Marketing, has recently completed a sales forecast. She believes the company's sales during the first quarter of 201 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 31,200,15 as follows: Jack Hanson, the assistent convoller, is now preparing a monthly budget for the first quarter of 201. In the process, the following information hos been occumulated: 1. Projected saies ror De cember of 200 are 5500 000 credis sales typically are 70 percent of totol sales intercoastal s credit experiencelindicates that 20 peccent of the credit soles ore collected during the month of sale. and the remainder ores collected during the foilowing month 2. Interconstaly copt of goods sold generally runs ot 80 percent of sales leventory is purchased on account and 30 . bercent of each monthis purchases ore poid during the month of purchase. The remainder is paid during the following month) In ofder to hove adequate stocks of inventory on hand, the firm attempts to hlove inventory at the end of esech firentit equal to half of the next month's projected cost of goods soidd 3. Hantson tios estimated thot interconstal's other monthile expenses will be as followe In addition, sales commissions fun at the rate of 3 percent of sales: 4. Intercoastal's president, Davies-Lowry, has indicated that the firm should invest $115,000 in an automated inventory-handling system to control the movement of inventory in the firm's warehouse just after the new yeat begins. These equipment purchases will be financed primarily from the firm's cash and marketable securities: However, Davies-Lowry believes that intercoastal needs to keep a minimum cash balance of $20,000. If necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Hanson believes short-term interest rates will be 10 percent per year at the time of the equipment purchases. If a loan is necessary. Davies-Lowry has decided it should be paid off by the end of the first quarter if possible. 5. Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on the last day of each quarter. 6. The interest on any short-term borrowing will be paid when the loan is repaid. Interest on Intercoastal's bonds is paid semiannually on January 31 and July 31 for the preceding six-month period. 7. Property taxes are paid semiannually on. February 28 and August 31 for the preceding slx-month period. Required: Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the following schedules and statements. 5. Complete the first three lines ot the summary cash buoget. Inen do the arialysts or sturtz Then finish requirement 5 . 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 Wicox, Intercoastal's General Manager of Marketing, has recently completed a sales forecast. She believes the company's sales during the first quarter of 201 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 31,200,15 as follows: Jack Hanson, the assistent convoller, is now preparing a monthly budget for the first quarter of 201. In the process, the following information hos been occumulated: 1. Projected saies ror De cember of 200 are 5500 000 credis sales typically are 70 percent of totol sales intercoastal s credit experiencelindicates that 20 peccent of the credit soles ore collected during the month of sale. and the remainder ores collected during the foilowing month 2. Interconstaly copt of goods sold generally runs ot 80 percent of sales leventory is purchased on account and 30 . bercent of each monthis purchases ore poid during the month of purchase. The remainder is paid during the following month) In ofder to hove adequate stocks of inventory on hand, the firm attempts to hlove inventory at the end of esech firentit equal to half of the next month's projected cost of goods soidd 3. Hantson tios estimated thot interconstal's other monthile expenses will be as followe In addition, sales commissions fun at the rate of 3 percent of sales: 4. Intercoastal's president, Davies-Lowry, has indicated that the firm should invest $115,000 in an automated inventory-handling system to control the movement of inventory in the firm's warehouse just after the new yeat begins. These equipment purchases will be financed primarily from the firm's cash and marketable securities: However, Davies-Lowry believes that intercoastal needs to keep a minimum cash balance of $20,000. If necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Hanson believes short-term interest rates will be 10 percent per year at the time of the equipment purchases. If a loan is necessary. Davies-Lowry has decided it should be paid off by the end of the first quarter if possible. 5. Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on the last day of each quarter. 6. The interest on any short-term borrowing will be paid when the loan is repaid. Interest on Intercoastal's bonds is paid semiannually on January 31 and July 31 for the preceding six-month period. 7. Property taxes are paid semiannually on. February 28 and August 31 for the preceding slx-month period. Required: Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the following schedules and statements. 5. Complete the first three lines ot the summary cash buoget. Inen do the arialysts or sturtz Then finish requirement 5