Forecasted Cash Budget July 31, 2020 Kane's Comanche Motor Sports Palace is the largest distributor of Comanche motorcycles and dirt bikes on the East Coast. The Company was started by its founder, Arnold Kane, in 1996 in Berlin, NH with an initial investment of $10,000. The Corporation's projected sales for the first eight months of 2020 are as follows: January $180,000 May $355,000 February 190,000 June 330,000 March 210,000 July 315,000 April 340,000 August 240,000 Of Kane's sales, 20% are for cash, 60% are collected in the month follow the month of sale, and the remainder are collected in the second month following the month of sale. November and December sales for 2019 were $220,000 and $175,000 respectively. In the middle of each month, Kane's earns a bonus from the Comanche factory of 1% of the previous month's sales for pushing the Comanche brand. Kane's purchases its raw materials two months in advance of its sales equal to 70% of its final sales price. The supplier is paid one month after it makes delivery. For example, purchases for April sales are made in February, and payment is made in March. In addition, Kane's pays $20,000 per month for rent of the complex and $10,000 per month for other expenditures. Estimated tax prepayments of $46,000 are made quarterly beginning in March. The Company's cash balance at December 31, 2019 was $42,000. As part of the Company's loan covenant, a minimum cash balance of $40,000 (one month' rent, one month's expenses and $10,000 for unknowns) must be maintained at all times. Assume that any short-term financing needed to maintain the minimum cash balance will be paid off in the month following the month of financing from the Company's revolving line of credit with the Amoskeag Savings Bank of the North Country if sufficient funds are available. Interest on short term loans (12%) is paid monthly. Borrowing to meet monthly cash needs takes place at the beginning of the month. Thus, if in the month of April for example, Kane's expects to have a need for an additional $60,500, these funds will be borrowed at the beginning of April with interest of $605 (.12 X.5 X $60,500) owed for April and paid by the 10th of May. 1)Prepare a cash budget for Kane's covering the first 7 months of 2020. 2) Kane's has committed to its foreign supplier to make a $250,000 deposit on the 2022 models that must be paid on July 31st or renegotiated for extension. Will Kane's Comanche Motor Sports have ample cash to make this deposit? 3) Prepare a pro-forma Statement of Cash Flows for July 31. 2020. 4) What is the Company's cash balance on September 30, 2020? Forecasted Cash Budget July 31, 2020 Kane's Comanche Motor Sports Palace is the largest distributor of Comanche motorcycles and dirt bikes on the East Coast. The Company was started by its founder, Arnold Kane, in 1996 in Berlin, NH with an initial investment of $10,000. The Corporation's projected sales for the first eight months of 2020 are as follows: January $180,000 May $355,000 February 190,000 June 330,000 March 210,000 July 315,000 April 340,000 August 240,000 Of Kane's sales, 20% are for cash, 60% are collected in the month follow the month of sale, and the remainder are collected in the second month following the month of sale. November and December sales for 2019 were $220,000 and $175,000 respectively. In the middle of each month, Kane's earns a bonus from the Comanche factory of 1% of the previous month's sales for pushing the Comanche brand. Kane's purchases its raw materials two months in advance of its sales equal to 70% of its final sales price. The supplier is paid one month after it makes delivery. For example, purchases for April sales are made in February, and payment is made in March. In addition, Kane's pays $20,000 per month for rent of the complex and $10,000 per month for other expenditures. Estimated tax prepayments of $46,000 are made quarterly beginning in March. The Company's cash balance at December 31, 2019 was $42,000. As part of the Company's loan covenant, a minimum cash balance of $40,000 (one month' rent, one month's expenses and $10,000 for unknowns) must be maintained at all times. Assume that any short-term financing needed to maintain the minimum cash balance will be paid off in the month following the month of financing from the Company's revolving line of credit with the Amoskeag Savings Bank of the North Country if sufficient funds are available. Interest on short term loans (12%) is paid monthly. Borrowing to meet monthly cash needs takes place at the beginning of the month. Thus, if in the month of April for example, Kane's expects to have a need for an additional $60,500, these funds will be borrowed at the beginning of April with interest of $605 (.12 X.5 X $60,500) owed for April and paid by the 10th of May. 1)Prepare a cash budget for Kane's covering the first 7 months of 2020. 2) Kane's has committed to its foreign supplier to make a $250,000 deposit on the 2022 models that must be paid on July 31st or renegotiated for extension. Will Kane's Comanche Motor Sports have ample cash to make this deposit? 3) Prepare a pro-forma Statement of Cash Flows for July 31. 2020. 4) What is the Company's cash balance on September 30, 2020