(Learning Objective 3: Preparing a cash budget and using cash-fl ow information) John Watson, chief fi nancial offi cer of Jasper Wireless, is responsible for the company’s budgeting process. Watson’s staff is preparing the Jasper cash budget for 20X7. A key input to the budgeting process is last year’s statement of cash fl ows, which follows (amounts in thousands):
❙ Requirements 1. Prepare the Jasper Wireless cash budget for 20X7. Date the budget simply “20X7” and denote the beginning and ending cash balances as “beginning” and “ending.” Assume the company expects 20X7 to be the same as 20X6, but with the following changes:

a. In 20X7, the company expects a 10% increase in collections from customers and a 20% increase in purchases of inventory.

b. There will be no sales of investments in 20X7.

c. Jasper plans to issue no shares in 20X7.

d. Jasper plans to end the year with a cash balance of $3,800.
2. Does the company’s cash budget for 20X7 suggest that Jasper is growing, holding steady, or decreasing in size? (Challenge)