Exercise $10-28($Algo$)$ Cash Budget$-$Financing Effects $[$LO $10-4]$

You are a relatively recent hire to Hartz & Company, a local manufacturer of plumbing supply products. You have been asked to prepare a condensed statement of cash flows for the months of November and December of the current year for presentation to the company's management.

Assume the cash balance at November $1$ will be $$87,000.$ It is the company's policy to maintain a minimum cash balance of $$50,000$ at the end of each month. Cash receipts $($from cash sales and collection of accounts receivable$)$ are projected to be $$568,000$ for November and $$459,000$ for December. Cash disbursements $($sales commissions, advertising, delivery expense, wages, utilities, etc.$)$ prior to financing activity are scheduled to be $$482,500$ in November and $$600,000$ in December.

Short$-$term borrowing, when needed, is done at the beginning of the month in increments of $$1,000.$ The annual interest rate on any such loans is estimated to be $12\%.$ Interest on any outstanding short$-$term loans is paid in cash at the end of the month. Repayments of principal $($if any$)$ are assumed to occur at the end of the month. As of November $1,$ the company has a $$50,000$ long$-$term loan from the local bank. This loan, including interest $($at $12\%$ per year$)$ for the month of November, is payable at the end of November.

Required:

Use the preceding information to prepare the cash budget for November and December. $($Hint: The December $31$ cash balance should be $$50,300.)($Enter financing and interest payments as negative amounts.$)$

$\backslash$table$[[$Hartz & Co$.],[$Cash Budget$],[$For November and December$],[,$November,December$],[$Cash balance, beginning,$87,000,],[$Add: Cash receipts,$568,000,459,000],[$Total cash available,$655,000,459,000],[$Cash disbursements, prior to financing,$482,500,600,000],[$Add: Minimum cash balance$],[$Total cash needed,$482,500,600,000]]$