Cash Budgeting Dorothy Koehl recently leased space in the Southside Mail and opened a new business, Koehl's Doll Shop. Business has been good, but Kochi frequently run out of cash. This has necessitated late payment on certain orders, which is beginning to cause a problem with suppliers. Koehl plans te borrow from the bank to have cash ready as needed, but first she needs a forecast of how much she should borrow. Accordingly, she has asked you prepare a cash budget for the critical period around Christmas, when needs will be especially high. Sales are made on a cash basis only. Koehl's purchases must be paid for during the following month. Koehl pays herself a salary of $4,000 per month and the rent is $2,600 per month. In addition, she must make a tax payment of $14,000 in December. The current cash on hand on December 1) is $750, but Koehl has agreed to maintain an average bank balance of $5,000 - this is her target cash balance. (Disregard the amount in the cash register, which is insignificant because Koehl keeps only a small amount on hand in order to lessen the chances of robbery.) The estimated sales and purchases for December, January, and February are shown below. Purchases during November amounted to $140,000 Sales Purchases December $150,000 $35,000 January 46,000 35,000 February 62,000 35,000 a. Prepare a cash budget for December, January, and February. I. Collections and Purchases: December January February Sales Purchases Payments for purchases $ Salaries Rent Taxes Total payments Cash at start of forecast $ Net cash flow Cumulative NCF Target cash balance Surplus cash or loans needed b. Suppose Koehl starts selling on a credit basis on December 1, giving customers 30 days to pay. All customers facts in the problem are unchanged. What would the company's loan requirements be at the end of December required to answer this part are minimal.) Cost of Trade Credit What are the nominal and effective costs of trade credit under the credit terms of 1/20, net 30? Assume 365 days in a year for your calculations. Round your answers to two decimal places. Do not round intermediate calculations. Nominal cost of trade credit 36.87 % Effective cost of trade credit