1) generate/spend

2) 217m 442M 242M 1,184M

3) balance/deficit

4) 429m 242m 442m 256m

5) shortfall/surplus

6) 218m 242m 442m 256m

7) 1491m 433m 1062m 472m

8) 472m 1491m 429m 218m

Capel Company's financial managers are meeting with the company's bank to renew their line of credit and discuss their investment needs. They have prepared the company's operating cash budget for the last six months of the year. The following budget assumptions were used to construct the budget: Capel's total sales for each month were first calculated in the sales budget and are reflected on the first line of the cash budget. Capel's sales are made on credit with terms of 2/10, net 30. Capel's experience is that 25% is collected from customers who take advantage of the discount, 65% is collected in the second month, and the last 10% is collected in the third month after the sale. The budget assumes that there are no bad debts. The cost of materials averages 50% of Capel's finished product. The purchases are generally made one month in advance of the sale, and Capel pays its suppliers in 30 days. Accordingly, if July sales are forecasted at $1,210 million, then purchases during June would be $605 ($1,210 million x 0.50), and this amount would be paid in July. Other cash expenses include wages and salaries at 18% of sales, monthly rent of $44 million, and other expenses at 5% of sales. Estimated tax payments of $64 million and $67 million are required to be paid on July 15 and October 15, respectively. In addition, a $1,100 million payment for a new plant must be made in September. Assume that Capel's targeted cash balance is $200, and the estimated cash on hand on July 1 is $225. Use the preceding information to fill in the missing amounts in the following cash budget. Use the preceding information to fill in the missing amounts in the following cash budget. Capel Company Cash Budget For the Six Months Ended December 31, Year 1 ($ millions) November December May $1,045 June $1,078 550 July $1,100 August September $1,111 $1,133 Credit sales Credit purchases October $1,155 594 $1,210 $1,188 605 567 578 July August September October November December 278 283 291 272 715 108 736 751 llllll 722 110 296 772 116 111 113 $1,155 $1,095 $1,110 $1,130 $1,184 550 567 594 605 556 200 198 204 214 218 44 44 44 44 44 Cash receipts Collections from this month's sales Collections from previous month's sales Collections from sales two months previously Total cash receipts Cash disbursements Payments for credit purchases Wages and salaries Rent Other expenses Taxes Payment for plant construction Total cash disbursements Net cash flow (Receipts - disbursements) Beginning cash balance Ending cash balance Target (minimum) cash balance Surplus (shortfall) cash MIMPI 55 56 57 59 61 64 1,100 $1,972 $911 $856 $911 $928 $165 -$862 $175 $244 $256 $239 390 225 629 -233 -58 186 $390 200 $629 200 -$58 200 $186 200 $442 200 $242 $190 $429 -$258 -$14 Use the information provided in the budget to complete the following sentences. Capel Company will be able to invest in short-term marketable securities in some months and will need to borrow to cover cash requirements in others. In the last six months of the year, Capel will to end the year with a cash of $ and a cash of $ Capel Company will want a credit line of at least $ to cover the month with the greatest shortfall, and the financial managers can tell the bank to expect that they will be able to invest up to $ in short-term marketable securities