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Pharoah Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Richard Miller, the firms marketing director, has completed the following sales forecast.

Month		Sales		Month		Sales
January		$900,000		July		$1,150,000
February		$1,000,000		August		$1,500,000
March		$900,000		September		$1,600,000
April		$1,100,000		October		$1,600,000
May		$850,000		November		$1,500,000
June		$950,000		December		$1,700,000

David Davis, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information.

	All sales are made on credit.
	Pharoahs excellent record in accounts receivable collection is expected to continue, with 30% of billings collected in the month of sale, 60% of billings collected in the month after sale and the remaining 10% collected two months after the sale.
	Cost of goods sold, Pharoahs largest expense, is estimated to equal 45% of sales dollars. Forty percent of inventory is purchased one month prior to sale and 60% during the month of sale. For example, in April, 60% of April cost of goods sold is purchased and 40% of May cost of goods sold is purchased.
	All purchases are made on account. Historically, 75% of accounts payable have been paid during the month of purchase, and the remaining 25% in the month following purchase.
	Hourly wages and fringe benefits, estimated at 30% of the current months sales, are paid in the month incurred.
	General and administrative expenses are projected to be $1,461,000 for the year. A breakdown of the expenses follows. All expenditures are paid monthly throughout the year, with the exception of property taxes, which are paid in four equal installments at the end of each quarter.

Salaries and fringe benefits		$	321,000
Advertising			378,000
Property taxes			80,000
Insurance			192,000
Utilities			144,000
Depreciation			346,000
Total		$	1,461,000

Operating income for the first quarter of the coming year is projected to be $320,000. Pharoah is subject to a 40% tax rate. The company pays 100% of its estimated taxes in the month following the end of each quarter.

Pharoah maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at the end of the month, the company borrows against its 12% line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $50,000.

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