E-Lan Electronics Budgeting Project Step 3 ELan Electronics expects the following as pertaining to the capital expenditures and cash budgets. Capital Expenditures The company plans to purchase selling and administrative equipment totaling $ 180,000 The company plans to purchase Production equipment totaling 1'. 3,100,000 Both will be purchased at the end of the March from operating cash ow and will not affect depreciation expense for the rst quarter. Cash Budget All sales are on credit. The company expects to collect 75% of sales in the month of sale, 22% of sales in the month following the sale, 3% percent will be uncollectable. Accounts receivable at the end of last year totaled $ 1,980,000 This represents the collectable amount of December sales. The company give credit terms of 2 / EOM, n/EOM second month All direct materials purchases are on credit. The company expects to pay 70% of purchases in the month of purchase and 30% the following month. Accounts Payable to be paid in January is 5 1,640,000 The company has a credit line of $3,000,000 for operations with an interest rate of 12% APR. At the end of every month, the cash balance should be 1; 50,000. The cash budget should include an estimate of amounts to be borrowed or returned to the credit line, and an estimated balance of the credit line. The Credit line has a balance at the end of December of $ 362,000 The company has good credit and can borrow funds on a secured basis at 4% but has not done so