In: Accounting
Month |
Sales |
|
January |
$100,000 |
|
February |
$120,000 |
|
March |
$150,000 |
|
April |
$180,000 |
|
May |
$150,000 |
|
June |
$120,000 |
|
July |
$150,000 |
|
August |
$180,000 |
Actual November and December 2018 sales were $200,000 and $90,000, respectively. Cash sales are 45% of the total and the rest are on credit. About 70% of credit sales are typically collected one month after the sale and 30% the second month. Monthly inventory purchases represent 50% of the following month’s sales. The firm pays 40% of its inventory purchases in cash and the remainder in the following month. Wages are expected to be 25% of the month’s sales, plus commissions to sales associates estimated to be 10% of collectable sales. A major capital expenditure of $22,000 is expected in April and a quarterly dividend of $10,000 will be paid to shareholders in March and June. Monthly rent is $2,500 and other maintenance expenses are estimated at 15% of sales. The firm has an ending cash balance of $20,000 for December 2018.
Required: