Answer:
Northeast AutoParts's
Cash Budget
January February
Cash inflows:
- Customers' credits $11,000 $15,200
- Business note <u> $8,500</u> <u> </u>
Total cash inflows $19.500 $15,200
Cash outflows:
- Inventory purchases ($15,600) ($14,800)
- selling and adm. expenses <u> ($2,900) </u> <u> ($2,900) </u>
Total cash outflows ($18,500) ($17,700)
Monthly cash flow $1,000 ($2,500)
Initial cash balance <u>$10,500</u> <u>$11,500</u>
Ending cash balance $11,500 $9,000
Required bank loan <u> $0 </u> <u> $1,000 </u>
Total $11,500 $10,000
Explanation:
January 1, beginning cash $10,500
cash collections from customers' credits:
- January $11,000
- February $15,200
- also a business note for $8,500 in January
estimated cash outflows:
- January $15,600
- February $14,800
- S&A expenses $2,900 each month
Bank's minimum balance $10,000
loans in multiples of $1,000