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We really need to get this new material-nandling equipment in operation just after the new year begins. I nope we can finance it largely with

We really need to get this new material-nandling equipment in operation just after the new year begins. I nope 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: Cash Accounts receivable Marketable securities Inventory Buildings and equipment (net of accumulated depreciation) Total assets Accounts payable Bond interest payable Property taxes payable Bonds payable (10%; due in 206) Common stock Retained earnings Total liabilities and stockholders' equity $ 45,000 360,000 15,000 192,500 600,000 $1,212,500 $ 220,500 13,750 6,000 330,000 500,000 142,250 $1,212,500 Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 201. In the process, 3. Hanson has estimated that Intercoastal's other monthly expenses will be as follows: Sales salaries Advertising and promotion Administrative salaries Depreciation Interest on bonds Property taxes $ 35,000 16,000 35,000 30,000 2,750 1,500 In addition, sales commissions run at the rate of 1 percent of sales. 3. Purchases budget: 20x0 December January February Budgeted cost of goods sold Add: Desired ending inventory Total goods needed Less: Expected beginning inventory Purchases 0 0 20x1 EA $ 0 SA March First Quarter 0 $ 0 0 $ 0 $ 0 0 0

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