The ABC Corporation is planning to request a line of credit from its bank and wants to estimate its cash needs for the month of September. The following sales forecasts have been made for 2021:

• ABC collects 15 percent of its sales in the month of the sale, 60 percent in the month following the sale, and the remaining 25 percent two months following the sale.

• Harrison’s raw materials cost 65 percent of its product’s final sales price and are purchased two months in advance of sale.

• The supplier is paid one month after purchases are made. (Thus, purchases for April sales are made in February, and payment is made in March.

• In addition, Harrison pays $15,000 per month for rent and $15,000 per month for other expenditures

• Tax prepayments of $25,500 are made each quarter beginning in March.

• The company’s cash balance as of December 31, 2020, was $30,000

• A minimum balance of $20,000 must be maintained at all times to satisfy the firm’s line-of-credit agreement with its bank.

• Harrison has arranged with its bank for short-term credit at an interest rate of 1 percent per month) to be paid monthly. , Then, if the firm needs to borrow $50,000 at the end of April, then it will pay $500 in interest (.01 * $50,000) at the end of May.

  Prepare a cash budget for the first six months of 2021 (January TO JUNE) Assume that the ending cash balance for December is $30,000 and that you want to maintain a balance of $ 20,000
   

November December January February March $215,000 $225,000 $270,000 $215,000 $285,000 April May June July August $280,000 $255,000 $220,000 $215,000 $220,000