Helton Medical Supply began October with $10,600 cash. Management forecasts that collections from credit customers will be $12,200 in October and $15,800 in November. The business is scheduled to receive $5,000 cash on a business note receivable in October. Projected cash payments include inventory purchases ($13,200 in October and $13,300 in November) and operating expenses ($3,600 each month).
Helton Medical Supply's bank requires a $10,000 minimum balance in the business' checking account. At the end of any month when the account balance dips below $10,000, the bank automatically extends credit to the business in multiples of $1,000. Helton Medical Supply borrows as little as possible and pays back loans in quarterly installments of $2,000 plus 4% interest on the entire unpaid principal. The first payment occurs three months after the loan.
Requirement
Prepare Helton Medical Supply's cash budget for October and November.