Construct the cash budget for December- March. Anticipated sales in Column 1 and cash disbursements in Column 2.

                            Sales               Cash Disbursements

December:        $5,000                       12,000

January:             15,000                       14,000

February:          25,000                         31,000

March:              40,000                         29,000

April:                 35,000                          14,000

May                  15,000                             7,000 

Thirty percent of the sales are for cash and 70 percent are on credit. Of the credit sales, 90 percent are collected one month after sale and 10 percent as collected two months after the original sale. Other anticipated receipts include a $1,000 tax refund in December.

The firm must retire a $25,000 loan in January. Since the $25,000 loan is retired in January, the desired level of cash will be reduced to $6,000 starting in February.

After completing the cash budget, answer the following questions:

1. What are the firm’s accounts receivable at the end of March?

2. What are the firm’s cash, amount borrowed, and short-term marketable securities at the end of March?

3. What is the amount borrowed during February