4. Transcript Company is preparing a cash budget for June. The company has $125,000 cash at the beginning of the month and anticipates having total sales of $1,222,000, consisting of 25% cash sales and 75% credit card sales. The bank charges 3 percent for credit card deposits. The firm sets its selling price at 150 percent of the cost of purchases and pays the cost of each month's sales at the end of the month.

Other cash disbursements are $66,000 per month, 4 percent of the total sales and the cash

purchase of a new tractor for $125,000. In addition, a $545,000 note will be due this month for

equipment purchased last year. Transcript Company has an agreement with its bank to maintain

a cash balance of $125,000.

Required: What is the cash balance and what amount, if any, must the company borrow during

June?

Beginning cash balance	$125,000
Cash receipts:-
Cash sales = 1,222,000* 25%	$305,500
Credit card sales = 1,222,000*75%*97%	$889,005
Total Cash Available	$1,319,505
Cash disbursements:
Note payable	$545,000
Purchases = 1,222,000/ 150%	$814,667
Other cash expenses:
Fixed expenses	$66,000
Variable expenses = 1,222,000*4%	$48,880
Total Cash disbursements	$1,474,547
Cash shortage	$155,042
Required minimum balance	$125,000
Required borrowing	$280,042