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

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

Current assets as of December 31:
Cash	$	6,000
Accounts receivable	$	36,000
Inventory	$	9,800
Buildings and equipment, net	$	110,885
Accounts payable	$	32,550
Capital stock	$	100,000
Retained earnings	$	30,135

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)	$60,000
January	$70,000
February	$80,000
March	$85,000
April	$55,000

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 month’s ending inventory should equal 20% of the following month’s budgeted cost of goods sold.
e.	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.
f.	Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter.
g.	Equipment will be acquired for cash: $3,000 in January and $8,000 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.

Required:
Using the data above:
1.	Complete the following schedule. (Omit the "$" sign in your response.)

Schedule of Expected Cash Collections
	January	February	March	Quarter
Cash sales	$28,000	$ 32,000	$ 34,000	$ 94,000
Credit sales	36,000	42,000	48,000	126,000
Total collections	$64,000	$ 74,000	$ 82,000	$ 220,000

2.	Complete the following: (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)

Merchandise Purchases Budget
	January		February	March	Quarter
Budgeted cost of goods sold	$49,000	*	$ 56,000	$ 59,500	$ 164,500
Add desired ending inventory	11,200	†	11,900	7,700	7,700
Total needs	60,200		67,900	67,200	172,200
Less beginning inventory	9,800		11,200	11,900	9,800
Required purchases	$50,400		$ 56,700	$ 55,300	$ 162,400

*$70,000 sales × 70% = $49,000.

†$80,000 × 70% × 20% = $11,200.

Schedule of Expected Cash Disbursements—Merchandise Purchases
		January		February		March		Quarter
December purchases		$ 32,550	*	$ 0		$ 0		$ 32,550
January purchases		12,600		37,800		0		50,400
February purchases		0		14,175		42,525		56,700
March purchases		0		0		13,825		13,825
Total disbursements		$ 45,150		$ 51,975		$ 56,350		$ 153,475

*Beginning balance of the accounts payable.

3.	Complete the following schedule: (Omit the "$" sign in your response.)

Schedule of Expected Cash Disbursements—Selling and Administrative Expenses
	January	February	March	Quarter
Commissions	$12,000	$ 12,000	$ 12,000	$ 36,000
Rent	1,800	1,800	1,800	5,400
Other expenses	5,600	6,400	6,800	18,800
Total disbursements	$19,400	$ 20,200	$ 20,600	$ 60,200

4.	Complete the following cash budget: (Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Picanuy Corporation
Cash Budget
	January	February	March	Quarter
Cash balance, beginning	$ 6,000	$ 5,450	$ 5,275	$ 6,000
Add cash collections	64,000	74,000	82,000	220,000
Total cash available	70,000	79,450	87,275	226,000
Less cash disbursements:
For inventory	45,150	51,975	56,350	153,475
For operating expenses	19,400	20,200	20,600	60,200
For equipment	3,000	8,000	0	11,000
Total cash disbursements	67,550	80,175	76,950	224,675
Excess (deficiency) of cash	2,450	-725	10,325	1,325
Financing:
Borrowings	3,000	6,000	0	9,000
Repayments	0	0	-5,000	-5,000
Interest	0	0	-210	-210
Total financing	3,000	6,000	-5,210	3,790
Cash balance, ending	$ 5,450	$ 5,275	$ 5,115	$ 5,115

5.	Prepare an absorption costing income statement for the quarter ended March 31. (Input all amounts as positive values. Omit the "$" sign in your response.)

Picanuy Corporation Income Statement For the Quarter Ended March 31
Sales		$ 235,000
Cost of goods sold:
Beginning inventory	$ 9,800
Purchases	162,400
Goods available for sale	172,200
Ending inventory	7,700	164,500
Gross margin		70,500
Selling and administrative expenses:
Commissions
Rent
Depreciation
Other expenses		62,600
Net operating income (loss)		7,900
Interest expense		210
Net income (loss)		$ 7,690

6.	Prepare a balance sheet as of March 31. (Be sure to list the assets and liabilities in order of their liquidity. Omit the "$" sign in your response.)

Picanuy Corporation Balance Sheet March 31
Assets
Current assets:
Cash		$ 5,115
Accounts receivable		51,000
Inventory		7,700
Total current assets		63,815
Fixed assets-net		119,485
Total assets		$ 183,300
Liabilities and Stockholders’ Equity
Accounts payable		$
Bank loan payable
Stockholders' equity:
Capital stock	$ 100,000
Retained earnings	37,825	137,825
Total liabilities and stockholders’ equity		$ 183,300