Cost Acct Pr.08.39.ALGO

sh Budget iendly Freddie's is an independently owned major appliance and electronics discount chain with seven stores located in a Midwestern metropolitan rea. Rapid expansion has created the need for careful planning of cash requirements to ensure that the chain is able to replenish stock adequately nd meet payment schedules to creditors. Fred Ferguson, founder of the chain, has established a banking relationship that provides a $200,000 line redit to Friendly Freddie's. The bank requires that a minimum balance of $8,120 be kept in the chain's checking account at the end of each month. When the balance goes below $8,120, the bank automatically extends the line of credit in multiples of $1,000 so that the checking account balance is at least $8,120 at month-end. Friendly Freddie's attempts to borrow as ittle as possible and repays the loans quickdly in multiples of $1,000 plus 2 percent monthly interest on the entire loan balance, Interest payments and any principal payments are paid at the end of the month following the loan. The chain currently has no outstanding loans. The following cash receipts and disbursements data apply to the fourth quarter of the current calendar year 9,180 Estimated beginning cash balance $ Estimated cash sales: 13,620 29,460 43,530 October November December Sales on account 130,700 uly (actual) August (actual) 104,500 Check My Work Prepare Friendly Freddie's cash budget for the months of October November and December showing allreceipts, disbursements, and credit ine activity here applicable. (CMA adapted), Enter all cash disbursements as positive values. If a cash balance is negative, enter the amount as a negative valuse If an amount is zero, enter "O" Friendly Freddie's Cash Budget October through December October November December Beginnng cash balance Recepts: 9,180 13,620 294 127,2ss | X 13,100 v 43.530 v 17 Cash sales Colections of saes on account (127255 x 13457 | 134.572 | | 169.187 x Note receivable repayment Total cash avelable Disbursements: Payment of inventory purchases S 117273 V 108931 V$123,869 V Operating expenses Loan repayment Interest $780010046.300 170,169 x s155.073 S 150.031 Total disbursements |12725slx 13,100 1134,5721 x 1169.187 |x Colections of sales on account Note recelvable repayment Total cash available Disbursements: Payment of nventory purchases s117273 18931126 4110046.300 C37.800) v C-46300 C411001 v Operating expenses 0 Loan repayment Interest 155,073 $ 150.031 X S 170.169X Total disbursements Cash balance Bank loan Adjusted cash balance Feedbad T Ched My Work The Cash Budget is critical to managers plannino. it shows how much cash will be available each time period. Companies without s cash may not survive even if their net income is positve