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Intercoastal's president, Davies - Lowry, has indicated that the firm should invest $ 1 0 5 , 0 0 0 in an automated inventory -
Intercoastal's president, DaviesLowry, has indicated that the firm should invest $ in an automated inventory
handling system to control the movement of inventory in the firm's warehouse just after the new year begins. These
equipment purchases will be financed primarily from the firm's cash and marketable securities However, DaviesLowry
believes that Intercoastal needs to keep a minimum cash balance of $ If necessary, the remainder of the
equipment purchases will be financed using shortterm credit from a local bank. The minimum period for such a loan is
three months. Hanson believes shortterm interest rates will be percent per year at the time of the equipment
purchases. If a loan is necessary, DaviesLowry has decided it should be paid off by the end of the first quarter if
possible.
Intercoastal's board of directors has indicated an intention to declare and pay dividends of $ on the last day of
each quarter.
The interest on any shortterm borrowing will be paid when the loan is repaid. Interest on Intercoastal's bonds is paid
semiannually on January and July for the preceding sixmonth period.
Property taxes are paid semiannually on February and August for the preceding sixmonth period.
Required:
Prepare Intercoastal Electronics Company's master budget for the first quarter of by completing the following
schedules and statements.
Problem Part
Cash disbursements budget: Round your inventory purchases up to the nearest whole dollar.
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