You are provided with the following information taken from Burlington Inc.’s March 31, 2007, balance sheet.

Cash $ 8,000 Accounts receivable 20,000 Inventory 36,000 Property, plant, and equipment, net of depreciation 120,000 Accounts payable 22,400 Common stock 150,000 Retained earnings 11,600 Additional information concerning Burlington Inc. is as follows. 1. Gross profit is 25% of sales. 2. Actual and budgeted sales data:

March (actual) $50,000 April (budgeted) 65,000 3. Sales are 60% for cash and 40% on credit. There are no sales discounts, and credit sales are collected in the month following the sale. 4. Half of a month’s purchases are paid for in the month of purchase and half in the following month. Purchases of inventory totalled $44,800 for the month of March and are anticipated to total $52,200 for the month of April. Ending inventory is expected to be $39,450 at the end of April. 5. Cash operating costs are anticipated to be $12,700 for the month of April. 6. Equipment costing $2,500 will be purchased for cash in April. 7. The company wishes to maintain a minimum cash balance of $8,000. An open line of credit is available at the bank. All borrowing is done at the beginning of the month, and all repayments are made at the end of the month. The interest rate is 12% per year, and interest expense is accrued at the end of the month and paid in the following month.

Instructions

(a) Calculate cash collections in April for March and April sales.

(b) Calculate the cash disbursements in April related to March and April purchases.

(c) Prepare a cash budget for the month of April. Determine how much cash Burlington Inc. must borrow, or can repay, in April.