The treasurer of Westmark Industrial, Inc., a wholesale distributor of household appliances, wants to estimate his company’s cash balances for the first three months of 2022. Using the following information, construct a monthly cash budget for Westmark for January through March 2022.

Westmark’s sales are 20 percent for cash, with the rest on 30-day credit terms. Its purchases are all on 60-day credit terms. Does it appear from your results that the treasurer should be concerned about investing excess cash or looking for a bank loan?

Westmark Industrial, Inc. Selected Information ($ thousands)

2021 (Actual) 2022 (Projected)

October November December January February March Sales 360 420 1,200 600 240 240 Purchases 510 540 1,200 300 120 120 Wages payable monthly 180 Principal payment on debt due in March 210 Interest due in March 90 Dividend payable in March 300 Taxes payable in February 180 Addition to accumulated depreciation in March 30 Cash balance on January 1, 2022 300 Minimum desired cash balance 150 LO.1