Yummy Delight is a frozen yogurt store selling frozen yogurt in one kilogram sizes and has the following information:

Estimated monthly Sales (in cups)

January to March: 45,000 per month

April to September: 70,000 per month

October to December: 22,000 per month

Frozen yogurt cups sell for $2.00 each from January 1stto March 31st, and $2.50 for April 1stto June 30th, $2.90 for July 1stto September 30th, and $3.00 for October 1stto December 31st. Half of the sales are paid in cash, and the other half is on account. 90% of the sales on account are collected in the current quarter, and the remaining 10% of credit sales are collected in the following quarter. The Accounts Receivable at December 31, 2018 was collected in January 2019.

Purchases and Inventory

Each cup requires 1kg of frozen yogurt and 1 cup. Frozen yogurt cost $14 for a 10kg tub and cups cost $10 for a box of 100 cups. All purchases are made on credit. Half of the purchases are paid for in the quarter of the purchase, and the other half is paid in the following quarter. (For simplicity, assume that the inventory has the same proportion of cups and frozen yogurt on hand, and that part boxes of cups and frozen yogurt can be purchased.) At the end of each quarter, they plan on having enough inventory on hand to cover 1?4 of the sales for the next quarter.

Expenses and Disbursements

Fixed expenses are expected to be $20,500 per quarter (Salaries of $13,000 Rent of $3,000 and depreciation of $4,500). Rent is paid at the beginning of each month. The accounts payable at December 31 2018 was paid in full on January 31 2019.

Dividends

$340,000 of dividends are paid on June 30th, and $240,000 of dividends are paid on Sept 30th.

Line of Credit

The store has a line of credit that they can borrow from time to time. Assume that advances occur on the first day of each quarter, and repayments occur on the last day of each quarter. Any extra cash is first used to pay off the line of credit.

Interest payments are made on the 1stday of the following quarter. For example, interest for the period January 1stto March 31stis due April 1st. Interest is 3% per quarter.

Any extra cash is first used to pay off the line of credit. Assume that advances occur on the first day of each quarter, and repayments occur on the last day of each quarter.

The only line of credit activity in the last 3 months of 2018 was a Nov 1stadvance of $6,000.

Cash

At the end of each quarter, the minimum cash balance is $1,000.

Beginning Balances at December 31, 2018 Cash $ 1,000 Inventory 5,000 Accounts Receivable 2,000 Equipment 180,000 Accumulated Depreciation (70,0001 Total Assets 1 18,000 Accounts Payable $22,000 Line of Credit 6,000 Retained Earnings 90,000 Total Liabilities and Equity 118,000