Why is the balance on account for February 1st $374000 f the balance on account on January is 240000? (information is on the budget project doc attached, on the Balances for February sheet)

Budget Project Timber Construction constructs furniture. They've decided they need to layout out their budgets for the first Quarter of 2019 to see if they will make a profit and have cash for a future expansion that will cost $600,000. They always must keep $100,000 minimum in the checking account every month. (Assume the beginning of the Quarter has the minimum cash balance.) The CEO also wants to have a minimum 12% profit margin for the Quarter to ensure stability. The CEO has said she wants to sell 5500 units in January, 6000 units in February, and 5000 in March. Looking forward into the second Quarter, she hopes to sell 6500 units in April. Each item sale price will be set at $170/unit. To build each unit, the purchasing agent says he can get the lumber for $50/unit, paint for $10/unit, and miscellaneous supplies for $5/unit. The production manager, based on past experience, says it costs about 2.6 hours/unit at $20/hour in labor costs. You are able as CFO to pull the other costs for the budgets: Utilities are about $8/unit, Factory salaries run $25,000/month, Factory property taxes average $6,000/month, and depreciation on Factory equipment is $20,000/month. Advertising costs average $2,500/month. Sales Commission is .5% of Gross Sales. CEO Salary is $150,000/year; CFO Salary is $120,000/year; Admin Assistant is $48,000/year. (Ignore payroll taxes.) Miscellaneous office expenses are about $1,500/month. Office Equipment is depreciated at $500/month. Additional info: Cash payments are paid in the month of. The CEO would like 40% of next month's production ready to sell so there is no shortages. Cash is collected 60% in the month of sale, and the remainder in the following month. Accounts Receivable on 1/1 is $240,000 Retained Earnings on 1/1 is $1,400,000 Income Tax Rate is 20% Finished Goods, 1/1 is $160,000 Finished Goods, 3/31 is $280,000 (estimated) WIP, 1/1 is $20,000 WIP, 3/31 is $25,000 (estimated) Raw Materials desired beginning, 1/1 is $60,000 (Lumber $49,000; Paint $5,000; Misc. Supplies $6,000) Raw Materials desired ending, 3/31 is $84,000 (Lumber $70,000; Paint $6,000; Misc. Supplies $8,000) Prepare Quarterly Budgets for Sales Budget, Production Budget, Direct Materials Budget, Direct Labor Budget, Factory Overhead Budget, Cost of Goods Sold, Selling & Admin Expense Budget, Proforma Income Statement, Cash Receipts Budget, Cash Payments Budget, Cash Budget. (Use formulas and cell references when using Excel.) Answer these Questions: What was the 3/31 balance in Accounts Receivable? Will they have enough money on March 31 to move forward with the expansion? What is the profit margin? Would you recommend the expansion? Why or why not? Timber Construction Budget Project Sales Price for each unit of issue Total sales per month January $5500 $170 February $6000 $170 March $5000 $170 $935,000 $1,020,000 $850,000 Balances for January Budget Balance on account as of January 1st Sales for January Total in account Expenses: Outstanding Balance on 1 Jan Percent of sales for Jan Balances for February Balance on account on February 1st Sales for February Total in account Outstanding Balance rolled over on February 1st Percent of Sales for February Balances for March Balance on account on March 1st Sales For March Total in account Expenses Outstanding balance on March 1st Percent of Sales for March 3/31 balance on March 31st Money in account per month $240,000 $935,000 $1,175,000 $240,000 $935,000 * 60% = $561,000 $374,000 $1,020,000 $1,394,000 $374,000 $1,020,000 * .60% = $612,000 $408,000 $850,000 $1,258,000 $408,000 $850,000 * 60% = $510,000 $340,000 Direct labor Budget Labor Hour Labor Rate Total Labor January 14,820 20 296,400 February 14,560 20 291,200 March 14,560 20 291,200 January 456,000 25,000 6,000 20,000 966,000 Febuary 448,000 25,000 6,000 20,000 958,000 March 448,000 25,000 6,000 20,000 958,000 Factory Overhead Budget Utilities Salary Property Taxes Depreciation Total Factory OVH Direct Materials Budget Jan 60,000 370,500 0 310,500 Feb 0 364,000 0 364,000 March 0 364,000 138,000 502,000 Jan 76,600 310,500 296,400 2,500 46,750 12,500 10,000 4000 0 -20,000 739,250 Feb 75,800 364,000 291,200 2,500 51,000 12,500 10,000 4000 0 0 811,000 Mar 75,800 502,000 291,200 2,500 42,500 12,500 10,000 4000 25,000 0 965,500 Selling and Admin Expenses Budget Jan Advertisement 2500 Sales Commission 46,750 Admin Assistant 4000 Advertisement 2500 Total Expenses 55,750 Feb 2500 51,000 4000 2500 60,0000 Mar 2500 42,500 4000 2500 51,500 Proforma Income Statement Jan Sales 935,000 Less: COGS 739,250 Profit 195,750 Feb 1,020,000 811,000 209,000 Mar 850,000 965,500 -115,500 Opening material Production Closing materials Total DM Cost of Goods Sold Factory OVH Material Costs Labor Costs Advertisemnt Sales Commission CEO Salary CFO salary Admin assistant Add closing WIP Less Opening WIP COGS Cash Received Budget Jan Cash on current 561,000 sale Cash on previous 240,000 sale Total Cash 801,000 received Feb 612,000 Mar 510,000 Apr 0 374,000 408,000 340,000 986,000 918,000 0 Cash Payments budget Material Payment Labor Payment Factory OVH Advertisement Sales Commission CEO Salary CFO Salary Admin Assistant Total Cash Payments Jan 310,500 296,400 76,600 2500 200 12,500 10,000 4000 712,700 Feb 364,000 291,200 75,800 2500 200 12,500 10,000 4000 760,200 Mar 502,000 291,200 75,800 2500 200 12,500 10,000 4000 898,200 Jan 801,000 712,700 88,300 Feb 986,000 760,200 225,800 Mar 918,000 898,200 19,800 Cash Budget Cash Receipt Cash Payment Total Cash Question Answers: 1) 3/31 AR = 330,000 2)Yes, they have 19,800 in their account at open. 3) 10.31% 4) I would not recommend this expansion due to the amounts portrayed on the proforma income statement. This statement says that in the month of March, you will make a profit of -115,500 dollars that month. If there is a chance of the next three months having around a break even or negative profit, one can put himself into a very big hole of debt if they opened an expansion