Question
Helen Bowers, owner of Helen's Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts
Helen Bowers, owner of Helen's Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2016 and 2017:
May 2016 | $186,000 | |
June | 186,000 | |
July | 372,000 | |
August | 540,000 | |
September | 720,000 | |
October | 360,000 | |
November | 360,000 | |
December | 90,000 | |
January 2017 | 180,000 |
Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials:
May 2016 | $90,000 | |
June | 90,000 | |
July | 126,000 | |
August | 883,000 | |
September | 306,000 | |
October | 234,000 | |
November | 161,000 | |
December | 90,000 |
General and administrative salaries are approximately $26,000 a month. Lease payments under long-term leases are $9,000 a month. Depreciation charges are $36,000 a month. Miscellaneous expenses are $2,600 a month. Income tax payments of $63,000 are due in September and December. A progress payment of $180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be $132,000, and a minimum cash balance of $90,000 should be maintained throughout the cash budget period.
Prepare monthly estimates of the required financing or excess funds - that is, the amount of money Bowers will need to borrow or will have available to invest. Round your answers to the nearest dollar. Enter loans outstanding with minus sign.
July | $ |
August | $ |
September | $ |
October | $ |
November | $ |
December | $ |
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