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15-10 CASH BUDGETING request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2016 and 2017 Helen Bowers, owner of Helen's Fashion Designs, is planning to May 2016 June July August September October November $180,000 180,000 360,000 540,000 720,000 360,000 360,000 90,000 180,000 January 2017 orking Capital Management, Forecasting, an department are as follows Estima within the month of sale, 10% collected the month following month after these services were pro materials: 75%; collected the tes regarding payments obtained from the credit de , 15%, Payments for labor and raw materials are month following the sane rovided. Here are the estimated costs of labor made estimated costs ofa e hd plus taw May 2016 June July August September October November Decem $90,000 90,000 126,000 882,000 306,000 234,000 162,000 90,000 15 ber General and administrative salaries are approximately $27,000 a month. L payments under long-term leases are $9,000 a month. Depreciation a month. Miscellaneous expenses are $2,700 a month. Income tax $63,000 are due in September and December. A progress payment of $180,000 on a neu charges are $36,000 payments of design studio must be paid in October. Cash on hand on July 1 will be $132,000 and a minimum cash balance of $90,000 should be maintained throughout the cash budget period a. Prepare a monthly cash budget for the last 6 months of 2016. b. Prepare monthly estimates of the required financing or excess funds-that is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers' sales are seasonal; and her company produces on sales. Without making any calculations, discuss how the company's cu ratios would vary during the year if all financial requirements were me bank loans. Could changes in these ratios affect the firm's ability to obtain Explain. a seasonal basis, just a current and debt

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