1. Prepare a monthly cash budget for Jones Products Inc. for the last six months of 2020 Use the following assumptions to prepare cash budget: Revenue estimates (in thousands): May * $385 Aug $550 Nov $680 Jun* $410 Sep $575 Dec $420 Jul $495 Oct $590 Jan (2021) $320

Collection on sales (all sales on credit): Current month: 18% First month following: 66% Second month following: 15% (1% bad debt losses)

Purchases of raw materials: 61% of projected following month sales Payment on purchases: 30 days following the purchase of materials

Other expenses and disbursements (in thousands): Utilities: $15/month Wages and salaries: $35 + 2% current month's sales Other fixed expenses: $5/month Interest on bonds (not LOC): $38 in Nov ($0 all other months) Quarterly tax payments: $40/month in Sep and Dec ($0 all other months) Equipment maintenance: $175 in Aug ($0 all other months)

Line-of-credit: $1,000,000 maximum available credit No maintenance fee 3.50% interest (annual rate, compounded monthly) on ending balance of the prior month

Other: - A minimum cash balance of $100K must be maintained at the end of each month - A balance of $55K on the line-of-credit exists at the end of June - Quarterly dividends of $25K will be paid in Jul and Oct ($0 all other months) - Any cash in excess of $100K at the end of each month will first be used to pay down any existing balance on the LOC, then swept into money market funds. Money market funds will earn 0.9% per annum (0.075% per month)