Cash disbursements budget:

Note: Round your inventory purchases up to the nearest whole dollar.

$\backslash$table$[[,,,,20,,,],[,,,,,,,$First Quarter$],[$Inventory purchases:,,,,,,,$],[$Cash payments for purchases during the curr,,,,,,,$],[$Cash payments for purchases during the prec,,,,,,,$],[$Total cash payments for inventory purchases,$$,0,$$$,0,$$$,0,$$

$$We really need to get this new material$-$handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities$,$ but if necessary we can get a short$-$term loan down at MetroBank.$$ This statement by Beth Davies$-$Lowry, president of Intercoastal Electronics Company, concluded a meeting she had called with the firm$$s top management. Intercoastal is a small, rapidly growing wholesaler of consumer electronic products. The firm$$s main product lines are small kitchen appliances and power tools. Marcia Polosky, Intercoastal$$s General Manager of Marketing, has recently completed a sales forecast. She believes the company$$s sales during the first quarter of $20$x$1$ will increase by $10$ percent each month over the previous month$$s sales. Then Polosky expects sales to remain constant for several months. Intercoastal$$s projected balance sheet as of December $31,20$x$0,$ is as follows:

Cash $ $50,000$

Accounts receivable $378,000$

Marketable securities $10,000$

Inventory $215,600$

Buildings and equipment $($net of accumulated depreciation$)647,000$

Total assets $ $1,300,600$

Accounts payable $ $246,960$

Bond interest payable $15,000$

Property taxes payable $2,400$

Bonds payable $(10\%$; due in $20$x$6360,000$

Common stock $500,000$

Retained earnings $176,240$

Total liabilities and stockholders$$ equity $ $1,300,600$

Joaquin Rafael, the assistant controller, is now preparing a monthly budget for the first quarter of $20$x$1.$ In the process, the following information has been accumulated: Intercoastal$$s president, Davies$-$Lowry, has indicated that the firm should invest $$100,000$ in an automated inventory$-$handling system to control the movement of inventory in the firm$$s warehouse just after the new year begins. These equipment purchases will be financed primarily from the firm$$s cash and marketable securities$.$ However, Davies$-$Lowry believes that Intercoastal needs to keep a minimum cash balance of $$50,000.$ If necessary, the remainder of the equipment purchases will be financed using short$-$term credit from a local bank. The minimum period for such a loan is three months. Rafael believes short$-$term interest rates will be $10$ percent per year at the time of the equipment purchases. If a loan is necessary, Davies$-$Lowry has decided it should be paid off by the end of the first quarter if possible.