Northeast Auto Parts, a family-owned auto parts store, began January with $10,000 cash. Management forecasts that collections from credit customers will be $11,000 in January and $15,300 in February. The store is scheduled to receive $8,000 cash on a business note receivable in January. Projected cash payments include inventory purchases ($15,400 in January and $12,800 in February) and selling and administrative expenses ($3,100 each month). Northeast 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. Northeast Auto Parts borrows as little as possible and pays back loans in quarterly installments of $2,000, plus 5%APR interest on the entire unpaid principal. The first payment occurs three months after the loan.

1. Please

prepare Northeast Auto Parts's cash budget for January and February.

Northern Auto Parts

Cash Budget

January and February

		January	February
Beginning cash balance		?	?
Cash receipts from customers		?	?
Cash receipt on note receivable		?	?
Cash available		?	?
Cash payments:		?	?
Purchases of inventory		?	?
Selling and administrative expenses		?	?
Total cash payments		?	?
Ending cash balance before financing		?	?
Less:	Minimum cash balance desired	?	?
Projected cash excess (deficiency)		?	?
Total effects of financing		?	?
Ending cash balance		?	?

2. How much cash will Northeast Auto Parts borrow in February if collections from customers that month total $14,300 instead of $15,300?