Lipton Auto Parts, a family-owned auto parts store, began January with $10,000 cash. Management forecasts that collections from credit customers will be $11,400 in January and $15,300 in February. The store is scheduled to receive $4,000 cash on a business note receivable in January. Projected cash payments include inventory purchases $10,900 in January and $14,500 in February) and selling and administrative expenses ($3,000 each month). Lipton Auto Parts's bank requires a $10,000 minimum balance in the store's checking account. At the end of any month when the account balance falls below $10,000, the bank automatically extends credit to the store in multiples of $1,000. Lipton Auto Parts borrows as little as possible and pays back loans in quarterly installments of $3,000, plus 55% APR interest on the entire unpaid principal. The first payment occurs three months after the loan.

Requirements

1.	Prepare Lipton Auto Parts's cash budget for January and February.
2.	How much cash will Lipton Auto Parts borrow in February if collections from customers that month total $14,300 instead of $15,300?

Requirement 1. Prepare Lipton Auto Parts's cash budget for January and February. Prepare the cash budget by entering in the labels, then enter in the amounts for January first and February next. (Complete all answer boxes. For entries with a $0 balance, make sure to enter "0" in the appropriate cell. Use parentheses or a minus sign when entering a deficiency.)

Lipton Auto Parts

Cash Budget

January and February

		January	February
Cash available
Cash payments:
Total cash payments
Less:
Ending cash balance