Fnendly 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 adequstely and meet payment schedules to creditors. Fred Fergusen, founder of the chain, has established a banking relationship that prevides&$200,000 line of credit to Friendly Freddie's The bank requires that a minimum balsnce of $8,230 be kept in the chain's checking account at the end of each r enth when the balance gces below SB 23o, the bank autom sticaly extends the ane of creat in mubples or s,000 so that the enecen account baan eat iest ,120 t momen-end Friendly Freddie's attempts to borrow as ittle as possible and repays the loans quickly in multiples of $1,000 plus 2 percent monthly interest on the entire loan balance. Ieterest payments and any principal payments are paid at the end of the month following the loan. The chain currently has na outstanding loans The following cash receipts and disbursements data apply to the fourth quarter of the current calendar year Estimated beginning cash balance 8.890 Estimated cash sales 13,700 October November December 29.370 Sales on account: luly (actual) August (actual September (actual) October (estimated Noversber (estimated)1 December (estimated) 129.100 ,200 128,300 34,500 188 200 cash collection of sales on account is estimated to be 72 percent in the menth following the sale, 18 percent in the second month following the sale, and s percent in the third montn tollowing the sale. The 2 percent beyand the third month following the sale is determined to be uncollectible in addtion, the chain is scheduled to receive s12,900 cash on a note recervable in October All inventory purchases are made an account as tne chain has excellent credit with all vendors because of a strong payment history The fullowing information regardng inventary purchiases a fourth quarter of the current esr The following cash receipts and disbursements deta apply to the Estimated beginning cash balance ,890 Estimated cash sales: 13,700 29,370 44,140 October November Sales on account July (actual August (actual) September (actual) October (estimated) November (estimated) December (estimated) 129.100 03,200 128,300 34,500 143,000 188,200 Projected cash collection of sales on account is estimated to be 72 percent in the month follo following the sale. The 2 percent beyond the third month following the October the sale. 18 percent in the second month following the sale, and 8 percent in the third monti s determined to be uncollecible. in addition, the chain is scheduled to receve $12,900 cash on a note receivable i All inventory purchases are made on account as the chain has excellent credit with all vendors because ofa strong payment history. The following information regarding inventony available Inventory Purchases September (actual) 120,600 October (estimated) 112,400 November (estimated) 128,100 December (estimated) 95,100 during October, November, and December are estimated to be $38,000, $41,300, and $45,500, respectively Required prepare Friendly Freddie's cash budget for the months of October, November, and December showing all recepts, disbursements, and credit line activity, where cash disbursements as positive values. If a cash balance is negative, enter the amount as a negative value. If an amount is zero, enter "0" Friendly Freddie's Cash Badget Begnning cash balance Receipts Cash sales Collections of sales on account Note receivable repayment Total cash avalable Disbursements Payment of nventory purchases Operating expenses Loan reparyment Total disbursements Cash balance Bank kan cash balance
