(Cash budget)

The Sharpe Corporation's projected sales for the first 8 months of 2016 are shown in the following table:

January	$190,000	May	$300,000
February	$120,000	June	$270,000
March	$135,000	July	$225,000
April	$240,000	August	$150,000

Of Sharpe's sales,10 percent is for cash, another 60 percent is collected in the month following the sales, and 30 percent is collected in the second month following sales. November and December sales for 2015 were $220,000 and $175,000, respectively.Sharpe purchases its raw materials 2 months in advance of its sales. The purchases are equal to 60 percent of the final sales price of Sharpe's products. The supplier is paid 1 month after it makes a delivery. Forexample, purchases for April sales are made in February, and payment is made in March.In addition, Sharpe pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in March. The company's cash balance on December 31, 2015, was $22,000.

This is the minimum balance the firm wants to maintain. Any borrowing that is needed to maintain this minimum is paid off in the subsequent month if there is sufficient cash. Interest on short-term loans (12 percent) 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

(0.12times 1/12times $60,500) owed for April and paid at the beginning of May.

a. Prepare a cash budget for Sharpe covering the first 7 months of 2016.

b. Sharpe has $200,000 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?

a. Prepare a cash budget for Sharpe covering the first 7 months of 2016.

Fill in the Collections for the month of January:(Round to the nearest dollar.)

	Nov	Dec	Jan	Feb	Mar	Apr	May	June	July
Sales	$220,000	$175,000	$190,000	$120,000	$135,000	$240,000	$300,000	$270,000	$225,000
Collections:
Month of sale (10%)			$19000
First month (60%)			$105000
Second month (30%)			$66000
Total Collections			$190000

Fill in the Collections for the month of February:(Round to the nearest dollar.)

Fill in the Collections for the months of March through July:(Round to the nearest dollar.)

	Nov	Dec	Jan	Feb	Mar	Apr	May	June	July
Sales	$220,000	$175,000	$190,000	$120,000	$135,000	$240,000	$300,000	$270,000	$225,000
Collections:
Month of sale (10%)			$19,000	$12,000	$13500	$24000	$30000	$27000	$22500
First month (60%)			$105,000	$114,000	$72000	$81000	$144000	$180000	$162000
Second month (30%)			$66,000	$52,500	$57000	$36000	$40500	$72000	$90000
Total Collections			$190,000	$178,500	$142500	$141000	$214500	$279000	$274500

Fill in the Disbursements for the month of January:(Round to the nearest dollar.)

	Nov	Dec	Jan	Feb	Mar	Apr	May	June	July
Cash Disbursements:
Purchases
Rent
Other Expenses
Tax Deposits
Interest on short term loan
Total Disbursements