eBook Cash Budget Print Item Friendly Freddie's is an independently owned major appliance and electronics discount chain with seven stores located in a Midwestern metropolitan area. Rapid expansion has created the need for careful planning of cash requirements to ensure that the chain is able to replenish stock adequately and meet payment schedules to creditors. Fred Ferguson, founder of the chain, has established a banking relationship that provides a $200,000 line of credit to Friendly Freddie's. The bank requires that a minimum balance of $8,140 be kept in the chain's checking account at the end of each month. When the balance goes below $8,140, the bank automatically extends the line of credit in multiples of $1,000 so that the checking account balance is at least $8,140 at month-end. Friendly Freddie's attempts to borrow as little as possible and repays the loans quickly 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. Estimated beginning cash balance $ 9,080 Estimated cash sales: October 13.560 November 29,170 December 43.810 Sales on account July (actual) 130,900 Aunust factual 105.000 Check My Work Previous Next 7:20 PM 11/2021 The following cash receipts and disbursements data apply to the fourth quarter of the current calendar year. Estimated beginning cash balance $ 9,080 Estimated cash sales: October 13,560 November 29,170 December 43,810 Sales on account: July (actual) 130,900 August (actual) 105,000 September (actual) 128,700 October (estimated) 136,000 November (estimated) 142,200 December (estimated) 187,200 Projected cash collection of sales on account is estimated to be 70 percent in the month following the sale, 20 percent in the second month following the sale, and 8 percent in the third month following the sale. The 2 percent beyond the third month following the sale is determined to be uncollectible. In addition, the chain is scheduled to receive $13,500 cash on a note receivable in October All inventory purchases are made on account as the chain has excellent credit with all vendors because of a strong payment history. The following information regarding inventory purchases is available. Previous Next> All inventory purchases are made on account as the chain has excellent credit with all vendors because of a strong payment history. The following information regarding inventory purchases is available. Inventory Purchases September (actual) $ 120,100 October (estimated) 111,600. > 721 P Friendly Freddie's Cash Budget October through December October November December 9,080 $ 9.130 X $ 9,120 X Beginning cash balance Receipts: Cash sales 13,560 29,170 Collections of sales on account Note receivable repayment 13.500 V 136,000 X $ Total cash available Disbursements: Payment of inventory purchases $ Operating expenses Loan repayment Interest Total disbursements Cash balance Bank loan Adjusted cash balance Check My Work 38,300 44,000 X