1. The treasurer for Brookdale Clothing must decide how much money the company needs to borrow in July. The balance sheet for June 30, 2004 is presented below: Brookdale Clothing Balance Sheet June 30, 2004 Cash $75,000 Accounts payable $400,000 Marketable securities 100,000 Longterm debt 300,000 Accounts receivable 300,000 Common stock 100,000 Inventory 250,000 Retained earnings 200,000 Total current assets 725,000 Total liabilities and Fixed assets 275,000 stockholders equity $1 000 000 Total assets $1 000 000 The company expects sales of $250,000 for July. The company has observed that 25% of its sales is for cash and that the remaining 75% is collected in the following month. The company plans to purchase $400,000 of new clothing. Usually 40% of purchases is for cash and the remaining 60% of purchases is paid in the following month. Salaries are $100,000 per month, lease payments are $50,000 per month, and depreciation charges are $20,000 per month. The company plans to purchase a new building for $200,000 in July and sell its marketable securities for $100,000. If the company must maintain a minimum cash balance of $50,000, how much money must the company borrow in July? Ans: Brookdale Clothing Cash Budget for July 2004 Cash Inows Reduction in Cash $25,000 Sale of Marketable securities 100,000 Collection of accounts receivable 300,000 Cash Sales (.25) ($250,000) 62,500 Total cash inows $407,500 Cosh Outows Repayment of accounts payable $400,000 Cash Purchase 160,000 Salaries 100,000 Lease Payments 50,000 Purchase of building 200,000 Total cash outows $910,000 Net inow (outow) {$487,500! The company needs to borrow $422,500