David Doyle, chief financial officer of Madison Wireless, is responsible for the companys budgeting process. Doyles staff

David Doyle, chief financial officer of Madison Wireless, is responsible for the company’s budgeting process. Doyle’s staff is preparing the Madison cash budget for 2013. A key input to the budgeting process is last year’s statement of cash flows, which follows (amount in thousands):

Requirements
1. Prepare the Madison Wireless cash budget for 2013. Date the budget simply “2013” and denote the beginning and ending cash balances as “beginning” and “ending.” Assume the company expects 2013 to be the same as 2012, but with the following changes:
a. In 2013, the company expects a 12% increase in collections from customers and a 25% increase in purchases of inventory.
b. There will be no sales of investments in 2013.
c. Madison plans to issue no stock in 2013.
d. Madison plans to end the year with a cash balance of$3,650.

Transcribed Image Text:

Madison Wireless Statement of Cash Flows 2012 (In thousands) Cash Flows from Operating Activities Collections from customers Interest received Purchases of inventory Operating expenses S 66,000 100 (50,000) (13,400) 2,700 Net cash provided by operating activities Cash Flows from Investing Activities Purchases of equipment Purchases of investments Sales of investments (4,800) (400) 400 (4,800) Net cash used for investing activities Cash Flows from Financing Activities Payment of long-term debt Issuance of stock Payment of cash dividends (600) 1,500 (200) Net cash provided by financing activities Cash Increase (decrease) in Cash Cash, beginning of year Cash, end of (1,400) 2,700 S 1,300