Helping Hand is a small, rapidly growing wholesaler of consumer electronic products. The companys main product lines are small kitchen appliances and power tools. The marketing manager has recently completed a sales forecast. She believes the companys sales will increase by 1 percent each month over the previous months sales from December 2018 through March 2019. Then sales are expected to remain constant for several months. Helping Hands projected balance sheet as of December 31, 2018 is as follows: Cash $ 60,000 Accounts receivable 172,530 Marketable securities 10,000 Inventory 39,784 Buildings and equipment (net of accumulated depreciation) 600,000 Total assets $ 882,314 Accounts payable $ 111,940 Sales commissions payable 4,040 Bond interest payable 8,000 Property taxes payable 0 Bonds payable (4%; due in 2022) 600,000 Common stock 100,000 Retained earnings 58,334 Total liabilities and stockholders' equity $ 882,314

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--The company president has indicated that the company should invest $225,000 in an automated inventory-handling system to control the movement of inventory in the companys warehouse just after the new year begins. The president would like to purchase the equipment primarily from the companys cash and marketable securities. However, the president believes the company should have a minimum cash balance of $30,000 at the end of each month. If necessary, the remainder of the equipment purchase may be financed using short-term credit from a local bank. The minimum lending period for such a loan is three months (this means the earliest the loan can be paid off is March 31st). The current short-term interest rates are 6 percent per year and are expected to remain at this rate through the time the equipment is purchased. If a loan is necessary, the entire amount required for the quarter must be borrowed on January 1st and must be in a $1,000 increment. The loan is a short term loan and the president has decided it should be paid off at the end of the first quarter if possible. If the entire amount cannot be repaid at March 31st, any partial payment will be paid at the end of the first quarter and in a $1,000 increment. --Helping Hands board of directors has indicated an intention to declare and pay dividends of $150,000 on the last day of each quarter. --The interest on any short-term borrowing will be paid when the loan is repaid. Interest on Helping Hands bonds is paid semiannually on February 28 and August 31 for the preceding sixmonth period. --Property taxes are paid quarterly on March 31, June 30, September 30, and December 31 for the preceding three-month period.

1. Prepare the Summary cash budget: 2019: January February March 1st Quarter Cash receipts Less: Cash disbursements Change in cash balance during period due to operations Sale of marketable securities (1/2/19) Proceeds from bank loan (1/2/19) Purchase of equipment Repayment of bank loan (3/31/19) Interest on bank loan Payment of dividends Change in cash balance during the month Beginning cash balance Ending cash balance

2. Prepare a memo to the president of Helping Hands Corp with at least two recommendations on how the company can ensure it completes the first quarter of 2019 with the minimum required cash balance. You should provide a plan to support your recommendation. For example, if you recommend an increase in sales, how can this be attained. Be specific. You should provide specific financial information for your recommendations utilizing your model (include a model for each of your recommendations). For example, if the company does X, the change in ending cash will be Y. Your model will become the property of Helping Hands Corp. and should be easy to use. Not buying the equipment is NOT an option. All assumptions are based on the purchase of the new equipment.