Friendly Freddies 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 Freddies. The bank requires that a minimum balance of $8,240 be kept in the chains checking account at the end of each month. When the balance goes below $8,240, the bank automatically extends the line of credit in multiples of $1,000 so that the checking account balance is at least $8,240 at month-end.

Friendly Freddies 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 $9,000

Estimated cash sales:

October13,650

November29,250

December44,220

Sales on account:

July (actual)129,900

August (actual)104,500

September (actual)127,100

October (estimated)134,500

November (estimated)142,800

December (estimated)187,100

Projected cash collection of sales on account is estimated to be 72 percent in the month following the sale, 18 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 $13,400 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.

Inventory Purchases
September (actual)	$	120,800
October (estimated)		111,500
November (estimated)		127,900
December (estimated)		95,700

Cash disbursements for inventory are made in the month following purchase using an average cash discount of 3 percent for timely payment. Monthly cash disbursements for operating expenses during October, November, and December are estimated to be $38,200, $40,700, and $45,500, respectively.

required:

Prepare Friendly Freddies cash budget for the months of October, November, and December showing all receipts, disbursements, and credit line activity, where applicable. (CMA adapted). Enter all 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".

October

November

December

Beginning cash balance

9000

Receipts:

Cash Sales

13650

29250

44220

Collections of sales on account

Note receivable repayment

Total Cash Available

$

$

$

Disbursements:

Payment of inventory purchases

Operating expenses

Loan repayment

Interest

Total disbursements

Cash balance

Bank Loan

Adjusted Cash Balance