develop aSix-month Cash Budget (from October 2019 to March 2020) (1) arrange for a short-term borrowing agreement with the bank; (2) decide the best schedule for the large capital expenditure. The following is the available data for the problem.

1.Actual and expected sales data are given in the following table.

Sep/ 2019 Oct/ 2019 Nov/ 2019 Dec/ 2019 Jan/2020 Feb/2020 Mar/2020 Apr/2020

$568,000 $575,000 $598,000 $618,000 $632,000 $650,000 $667,000 $681,000

2.Sales: 60% cash, 40% collected in the following month.

3.Inventory = 58% of the sale in following month.

4.Inventory payments: 60% of inventory is paid for in the month of delivery, 40% is paid one month later.

5.Wages = 25% of the sales in the previous month.

6.Monthly interest payments = $15,000.

7.Principal payments $25,000 in November 2019 and February 2020

8.Dividend = $28,000 in October 2019 and January 2020

9.Taxes, $25,000 in December 2019, and $28,000 in March 2020

10.Capital expenditure scheduled in November 2019: $300,000, but the schedule is flexible and may be changed.

11.In September 2019, the ending cash balance is $38,000.

12.Minimum Cash Balance = $50,000

Take current borrowing, current investing, and short-term interest payments into account and develop a separate complex cash budget for the company. Add such items as interest expense for short-term borrowing (investing), current investing, cumulative borrowing (investing), and cumulative interest expenses into the cash budget table. (assume the capital expenditure is scheduled in November 2019 for the complex cash budget analysis).

If the firm plans to borrow and it has some investments, you should sell investments to reduce the amount of borrowing. If the unadjusted cash balances greater than the minimum and the firm has previous borrowing, then use the cash above the minimum to reduce the outstanding borrowing.

If the sum of the unadjusted cash balance and current borrowing is less than the minimum required cash, the firm needs to sell some investments. If the sum of the unadjusted cash balance and current borrowing is greater than the maximum acceptable cash, the firm must invest the excess cash in the short-term securities.

The annual borrowing rate is 6.0% and the annual lending rate is 3.6%. The maximum cash balance is $80,000.