E5-25A. (Learning Objective 3: Preparing a cash budget) Chad Communications, Inc., is preparing its cash budget for 20X7. Chad ended 20X6 with cash of $82 million, and managers need to keep a cash balance of at least $86 million for operations.

Collections from customers are expected to total $11,308 million during 20X7, and payments for the cost of services and products should reach $6,165 million. Operating expense payments are budgeted at $2,543 million.

During 20X7, Chad expects to invest $1,816 million in new equipment and sell older assets for $116 million. Debt payments scheduled for 20X7 will total $604 million. The company forecasts net income of $895 million for 20X7 and plans to pay dividends of $33 million.

Prepare Chad Communications’ cash budget for 20X7. Will the budgeted level of cash receipts leave Chad with the desired ending cash balance of $86 million, or will the company need additional financing? If so, how much?