Betty Best, owner of Best Ideas, Inc.

Betty Best, owner of Best Ideas, Inc. is planning to request a line of credit from her bank. She has estimated the following forecasts for the company for parts of 2011 and 2012; Labor and Raw Materials Sales May 2011 June August September October November December January 2012 $370,000 S370,000 $730,000 $1,090,000 $1,450,000 $730,000 $730,000 $190,000 $370,000 $200,000 $190,000 $262,000 $1,774,000 $622,000 $478,000 $334,000 $190,000 N/A The credit and collections department estimates that collections obtained from ongoing operations will match the following credit policy. 1) Collections within the month of sales are l 5% of that month's sales; 2) collections the month following the sale are estimated at 70% of the prior month's sales, and 3) collections the second month following sales are estimated at 15% of sales from two months prior. Total sales figures are estimated to be incurred for each month as shown above Payments for labor and raw materials are typically made during the month following the one in which these costs were incurred. Total labor and raw materials cost are estimated to be incurred for each month as shown above. The company currently leases their work space and payments under long-term lease contracts are $18,000 a month. Salaries for labor and administration employees are approximately $54,000 a month. Current depreciation charges total $72,000 a month on existing equipment. They estimate that miscellaneous expenses will be $5,000 a month. The company makes quarterly estimated income tax payments of $126,000 in both September and December. The company plans to make a progress payment of $460,000 on a new manufacturing facility that must be paid in October. Cash on hand on July 1 is orecasted at $264,000, and a minimum cash balance of $180,000 will be maintained throughout the cash budget period. Required: a. Prepare a monthly cash budget for the last 6 months of 2011 for Best Ideas, Inc. b. Prepare an estimate of the required financing (or excess funds)- that is, the amount of money Best Ideas, Inc. will need to borrow (or will have available to invest) -for each month during that period