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, 2. Intercoastal's cost of goods sold generally runs at 70 percent of sales. Inventory is purchased on account, and 40 percent of each month's purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month's projected cost of goods sold. 2. Cash receipts budget: Cash sales January February 20x1 March First Quarter Cash collections from credit sales made during current month Cash collections from credit sales made during preceding month Total cash receipts $ 0 $ 0 $ 0 $ 0