Cash budget

Friendly Freddie's is a major, independently owned discount electronics and home appliance chain with seven stores located in a Midwestern metropolitan area. The rapid expansion has created the need for careful planning of cash requirements to ensure the chain can adequately replenish inventory and meet payment schedules to creditors. Fred Ferguson, founder of the chain, has established a banking relationship that provides a $200,000 line of credit to Friendly Freddie's. The bank requires a minimum balance of $8,180 to be maintained in the chain's checking account at the end of each month. When the balance drops below $8,180, the bank automatically extends the line of credit in multiples of $1,

Friendly Freddie's tries to borrow as little as possible and pays off loans quickly in multiples of $1,000 plus 2 percent monthly interest on the total loan balance. Interest payments and any principal payments are due at the end of the month following the loan. The chain currently has no outstanding loans.

The below cash receipts and disbursements data applies to the fourth quarter of the current calendar year.

Estimated Beginning Cash Balance	ps	8,960
Estimated Cash Sales:
October		13,790
November		29,410
December		43,870
Sales on account:
july (actual)		129,000
august (real)		103,700
September (actual)		128,000
October (estimated)		134,700
November (estimated)		141,900
December (estimated)		187,100

Projected cash collection from sales on account is estimated at 72 percent in the month after the sale, 18 percent in the second month after the sale, and 8 percent in the third month after the sale. 2 percent beyond the third month following the sale is determined to be uncollectible. Additionally, the chain is scheduled to receive $12,500 in cash in a note receivable in October.

All inventory purchases are made on account as the chain has excellent credit with all suppliers due to a strong payment history. The following information on inventory purchases is available.

inventory purchases
September (actual)	ps	121,000
October (estimated)		112,400
November (estimated)		127,600
December (estimated)		95,900

Cash disbursements for inventory are made in the month following the purchase using an average cash discount of 3 percent for prompt payment. Monthly cash disbursements for operating expenses during October, November, and December are estimated at $38,200, $40,800, and $46,300, respectively.

Required:

Prepare Friendly Freddie's cash budget for the months of October, November, and December showing all receipts, disbursements, and line of credit activity, where applicable. (adapted to CMA) . Enter all cash disbursements as positive values. If a cash balance is negative, enter the amount as a negative value. If an amount is zero, enter "0".

Friendly Freddie's
cash budget
From October to december
	October	November	December
Beginning Cash Balance	ps	ps	ps
Income:
cash sales
Sales receipts on account
Repayment of notes receivable
Total cash available	ps	ps	ps
Disbursements:
Payment of inventory purchases	ps	ps	ps
operating expenses
Loan payment
Interest
total disbursements	ps	ps	ps
cash balance	ps	ps	ps
bank loan
Adjusted Cash Balance	ps	ps	ps