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a.	As of December 31 (the end of the prior quarter), the companys balance sheet showed the following account balances:

Cash	$	13,100
Accounts receivable		55,800
Inventory		18,620
Buildings and equipment (net)		135,000
Accounts payable			$	47,000
Common stock				115,000
Retained earnings				60,520
	$	222,520	$	222,520
b. Actual and budgeted sales are as follows:

December(actual)	$ 93,000
January	$ 133,000
February	$ 194,000
March	$ 102,000
April	$ 100,000
c. Sales are 40% for cash and 60% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at December 31 are a result of December credit sales. d. The company's gross margin percentage is 30% of sales. (In other words, cost of goods sold is 70% of sales.) e. Each month's ending inventory should equal 20% of the following month's budgeted cost of goods sold. f. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other three- quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory. g. Monthly expenses are as follows: commissions, $27,500; rent, $4,150; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $4,050 for the quarter and includes depreciation on new assets acquired during the quarter. h. Equipment will be acquired for cash: $5,330 in January and $9,600 in February. i. Management would like to maintain a minimum cash balance of $7,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $50,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. 1. Schedule of expected cash collections:

	2. Merchandise Purchases Budget January February March Quarter - Total Budgeted cost of goods sold $93,100 $135,800 Add: desired ending inventory 27,160 Total needs Less: beginning inventory 18,620 Required purchases

3.Schedule of Cash Disbursements for Purchases

4. Schedule of Cash Disbursements for Selling and Administrative Expenses
	January
Commissions	$27,500
Rent	4,150
Other expenses	10,640
Total cash disbursements for selling and administrative expenses	$42,290

	7.Balance Sheet March 31 Assets Current assets: Cash Accounts receivable Inventory Buildings and equipment, net Total current assets Depreciation expense Total assets Accounts payable Bank loan payable Stockholders' equity: Common stock Retained earnings Total liabilities and stockholders equity

	6.Income Statement For the Quarter Ended March 31 Sales Cost of goods sold: Beginning inventory Purchases Ending inventory Depreciation Gross margin Selling and administrative expenses: Commissions Rent Other expenses Depreciation Net operating income Interest expense Net income(loss)

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