Precision Machines is preparing a financial plan for the next six months to determine the financial needs of the company. The historical analysis of the companys sales shows that the companys total sales are 30% cash sales and 70% credit sales. Further analysis of credit sales shows that the company receives 50% of the credit sales one month after the sale and the remaining 50% in the second month after the sale. This means the cash collections from sales are 30% in the first month of the sale, 35% in the second month, and 35% in the third month. The materials purchased by the company amounts to 50% of the sales for the month. The company pays for the purchases one month after the initial purchase. The company likes to maintain a cash balance of $5,000. The cost of borrowing is 10%. The company plans to pay off the loan whenever there is a surplus and borrow when there is a deficit. The attached spreadsheet shows revenues (sales), expenses, capital expenditures, and other expenses for Precision Machines next six months. Using the information given on the spreadsheet, prepare a cash budget for January through June and determine the cash surplus, deficit, and the financing needs of the company.

Precision Machines Student Note: Fill in the liaht yellow cells 2 3 Data: 4 November DecemberJanuaryFebruary March April May June 10.00% $5,000.00 $7,500.00 Annual Cost of borrowing 6 Minimum Cash Balance 7 Beginning Cash Balance 8 Revenues (Sales) 9 10 11 Cash Collections 12 First Month (30%) 13 Second Month (35%) 14 Third Month (35%) 15 Total Collections 16 17 Cash Disbursements 18 Material Purchases 19 Salaries 20 Wages 21 Other Expenses 22 Capital Expenditure 23 Dividends 24 Interest 25 Total Disbursements 26 $40,000.00 $50,000.00 $48,000.00 $55,000.00 $35,000.00 $50,000.00 $65,000.00 $40,000.00 November December January February March April May June 6,000.006,000.006,000.006,000.006,000.00 6,000.00 3,000.00 3,500.003,000.003,200.003,500.003,000.00 45,000.00 1,000.00 1,000.00