14-6A. (Cash Budgef) The Carmel Corporation's projected sales for the first eight months of 2001 are as follows: January February March $100,000 110,000 130,000 250,000 May June Jul August $275,000 250,000 235,000 160,000 Of Carmel's sales, 20% is for cash, another 60% is collected in the month following sale, and 20 percent is collected in the second month following sale. November and December sales for 2000 were $220,000 and $175,000, respectively. Carmel purchases its raw materials two months in advance of its sales equal to 70% of its final sales price. The supplier is paid one month after it makes delivery. For example, purchases for April sales are made in February, and payment is made in March. In addition, Carmel pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments for $23,000 are made each quarter beginning in March. The company's cash balance at December 31,2000, was $22,000; a minimum balance of $20,000 must be maintained at all times. Assume that any short-term financing needed to maintain cash balance would be paid off in the month following the month of financing if sufficient funds are available. Interest on short-term loans (12%) is paid monthly. Borrowing to meet estimated monthly cash needs takes place at the beginning of the month. Thus, if in the month of April the firm expects to have a need for an additional $60,500, these funds would be borrowed at the beginning of April with interest of $605 (.12 x 1/12 x S60,500) owed for April and paid at the beginning of May. a. Prre a cash budget for Carmel covering the first seven months of 2001. b. Carmel has $250,000 in notes payable due in July that must be repaid or renegotiated for an extension. Will the firm have ample cash to repay the notes