Mark Farmer, chief financial officer of Carvel Wireless, is responsible for the company's budgeting process. Farmer's staff is preparing the Carvel cash budget for 2017. A key input to the budgeting process is last year's statement of cash flows, which follows (amount in thousands):

Requirements
1. Prepare the Carvel Wireless cash budget for 2017. Date the budget simply "2017," and denote the beginning and ending cash balances as "beginning" and "ending." Assume the company expects 2017 to be the same as 2016, but with the following changes:
a. In 2017, the company expects a 12% increase in collections from customers and a 20% increase in cash payments for inventory.
b. There will be no sales of investments in 2017.
c. Carvel Wireless plans to issue no stock in 2017.
d. Carvel Wireless plans to end the year with a cash balance of $3,500 (thousand).

Transcribed Image Text:

Carvel Wireless Statement of Cash Flows For the Year Ended December 31, 2016 (In thousands) 3 Cash Flows from Operating Activities Collections from customers 65,000 300 44,000) 13,900 5Interest received Cash payments for invento Cash payments for operating expenses Net cash provided by operating activities Cash Flows from Investing Activities 10 Purchases of equipment 1Purchases of investments 12 Sales of investments 13 14 Cash Flows from Financing Activities 15 Payment of long-term debt 16ssuance of stock 17 Payment of cash dividends 18 19 Cash 20 Increase (decrease) in Cash 21 Cash, beginning of year (4,400) 400 900 3,900 Net cash used for investing activities 500) 1,800 200 Net cash provided by financing activitie 4,600 ash, end of year 7,900 23