Cash Budget Friendly Freddies is an independently owned major appliance and electronics discount chain with seven stores located in a Midwestern metropolitan area. Rapid expansion has created the need for careful planning of cash requirements to ensure that the chain is able to replenish stock adequately 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 Freddies. The bank requires that a minimum balance of $8,120 be kept in the chains checking account at the end of each month. When the balance goes below $8,120, the bank automatically extends the line of credit in multiples of $1,000 so that the checking account balance is at least $8,120 at month-end. Friendly Freddies attempts to borrow as little as possible and repays the loans quickly in multiples of $1,000 plus 2 percent monthly interest on the entire loan balance. Interest payments and any principal payments are paid at the end of the month following the loan. The chain currently has no outstanding loans. The following cash receipts and disbursements data apply to the fourth quarter of the current calendar year. Estimated beginning cash balance $ 9,010 Estimated cash sales: October 13,980 November 29,020 December 44,000 Sales on account: July (actual) 129,900 August (actual) 103,500 September (actual) 127,300 October (estimated) 135,200 November (estimated) 142,700 December (estimated) 188,700 Projected cash collection of sales on account is estimated to be 71 percent in the month following the sale, 19 percent in the second month following the sale, and 6 percent in the third month following the sale. The 4 percent beyond the third month following the sale is determined to be uncollectible. In addition, the chain is scheduled to receive $13,300 cash on a note receivable in October. All inventory purchases are made on account as the chain has excellent credit with all vendors because of a strong payment history. The following information regarding inventory purchases is available. Inventory Purchases September (actual) $ 120,700 October (estimated) 111,600 November (estimated) 127,700 December (estimated) 94,000 Cash disbursements for inventory are made in the month following purchase using an average cash discount of 3 percent for timely payment. Monthly cash disbursements for operating expenses during October, November, and December are estimated to be $38,400, $41,300, and $46,500, respectively.

Prepare Friendly Freddies cash budget for the months of October, November, and December showing all receipts, disbursements, and credit line activity, where applicable. (CMA adapted). 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
October through December
		October		November		December
Beginning cash balance		$ Correct 8		$ Correct 9		$ Correct 10
Receipts:
Cash sales		Correct 13		Correct 14		Correct 15
Collections of sales on account		Correct 17		Correct 18		Correct 19
Note receivable repayment		Correct 21
Total cash available		$ Correct 23		$ Correct 24		$ Correct 25
Disbursements:
Payment of inventory purchases		$ Correct 28		$ Correct 29		$ Correct 30
Operating expenses		Correct 32		Correct 33		Correct 34
Loan repayment				Correct 36		Correct 37
Interest				Correct 39		Correct 40
Total disbursements		$ Correct 42		$ Correct 43		$ Correct 44
Cash balance		$ Correct 46		$ Correct 47		$ Correct 48
Bank loan		Correct 50
Adjusted cash balance		$ Correct 52		$ Correct 53		$ Correct 54