Northeast Auto Parts, a family-owned auto parts store, began January with $10,100 cash. Management forecasts that collections from credit customers will be $11,100 in January and $14,700 in February. The store is scheduled to receive $8,000 cash on a business note receivable in January. Projected cash payments include inventory purchases ($15,500 in January and $12,300 in February) and selling and administrative expense ($3,200each month).

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More info Northeast Auto Parts' 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 $1,500, plus 6% APR interest on the entire unpaid principal. The first payment occurs three months after the loan