The following data relate to the operations of Picanuy Corporation, a wholesale distributor of consumer goods:

Current assets as of December 31:
Cash	$	6,100
Accounts receivable	$	40,500
Inventory	$	10,430
Buildings and equipment, net	$	115,900
Accounts payable	$	32,410
Capital stock	$	100,000
Retained earnings	$	40,520

a.	The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.)
b.	Actual and budgeted sales data are as follows:

December (actual)	$67,500
January	$74,500
February	$80,200
March	$94,100
April	$56,100

c.	Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales.
d.	Each months ending inventory should equal 20% of the following months budgeted cost of goods sold.
e.	One-quarter of a months 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.
f.	Monthly expenses are as follows: commissions, $12,250; rent, $2,200; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $2,740 for the quarter and includes depreciation on new assets acquired during the quarter.
g.	Equipment will be acquired for cash: $7,200 in January and $8,090 in February.
h.	Management would like to maintain a minimum cash balance of $5,000 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.

	Schedule of Expected Cash Collections January February March Quarter Cash sales $29,800 $32,080 $37,640 $22,440 Credit sales 40,500 48,120 56,460 33,660 Total collections $70,300 $80,200 $94,100 $56,100
	Merchandise Purchases Budget January February March Quarter Budgeted cost of goods sold $52,150 $56,140 $59,500 $167,790 Add desired ending inventory 11,228 11,900 7,700 30,828 Total needs 63,378 68,040 67,200 198,618 Less beginning inventory 10,430 11,228 11,900 11,000 Required purchases $52,948 $56,812 $55,300 $187,618

Budgeted cost of goods sold for January = $74,500 sales 70% = $52,150.

Add desired ending inventory for January = $80,200 70% 20% = $11,228

	Schedule of Expected Cash DisbursementsMerchandise Purchases January February March Quarter December purchases $32,410.00 $0.00 $0.00 $32,410.00 January purchases $13,237.00 $39,711.00 $0.00 $52,948.00 February purchases $0.00 March purchases $0.00 $0.00 Total disbursements $45,647.00 $39,711.00 $0.00 $85,358.00

	Schedule of Expected Cash DisbursementsSelling and Administrative Expenses January February March Quarter Commissions $12,250 $12,250 $12,250 $12,250 Rent 2,200 2,200 2,200 2,200 Other expenses 5,960 6,416 7,528 19,904 Total disbursements $20,410 $20,866 $21,978 $34,354

Picanuy Corporation Cash Budget January February March Quarter Cash balance, beginning 6,100.00 Add cash collections 70,300.00 48,120.00 56,460.00 56,100.00 Total cash available 76,400.00 48,120.00 56,460.00 56,100.00 Less cash disbursements: For inventory 45,647.00 For operating expenses 20,410.00 For equipment 7,200.00 Total disbursements 73,257.00 0.00 0.00 0.00 Excess (deficiency) of cash 3,143.00 48,120.00 56,460.00 56,100.00 Financing: Borrowings Repayments Interest Total financing $0.00 $0.00 $0.00 $0.00 Cash balance, ending $3,143.00 $48,120.00 $56,460.00 $56,100.00

	Picanuy Corporation Income Statement For the Quarter Ended March 31 Sales $248,800 Cost of goods sold: Beginning inventory Purchases Goods available for sale 0 Ending inventory 0 Gross margin 248,800 Selling and administrative expenses: Commissions Rent Depreciation Other expenses 0 Net operating income 248,800 Interest expense Net income 248,800

	Picanuy Corporation Balance Sheet March 31 Assets Current assets: Cash Account receivable Inventory Total current assets 0 Fixed assets-net Total assets $0 Liabilities and Stockholders Equity Account payable Bank loan payable Stockholders' equity: Capital stock Retained earnings 0 Total liabilities and stockholders equity $0