You have been given the following information for your company:
Budgeted credit sales: February, $350,000; March, $360,000; and April, $400,000.
The company collects 70% of its sales in the month of sale and 30% in the following month.
Gross profit ratio is 40% of sales.
Purchases total 65% of the following month's sales and are paid in the month following the purchase.
Cash-based operating expenses total $60,000 per month and are paid when incurred.
Monthly depreciation amounts to $18,000.
Selected amounts from the January 31 balance sheet are: accounts receivable, $115,000; plant and equipment (net), $107,000; and retained earnings, $85,000.
1. Prepare a budgeted income statement that summarizes the activity for the two months ended March 31.
2. Compute the amounts that would appear on the March 31 balance sheet for accounts receivable, plant and equipment (net), and retained earnings.