Prepare a cash budget for Atlas Products, Inc., for the first quarter of 2017, based on the following information: The budgeting section of the corporate finance department of Atlas Products has received the following sales estimates from the marketing department: Total Sales Credit Sales December 2016 $325,000 $770,000 January 2017 730,000 690,000 February 2017 840,000 780,000 March 2017 920,000 855,000 The company has found that, on average, about 25 percent of its credit sales are collected during the month when the sale is made, and the remaining 75 percent of credit sales are collected during the month following the sale. As a result, the com- pany uses these figures for budgeting. The company estimates its purchases at 60 percent of next month's sales, and payments for those purchases are budgeted to lag the purchases by one month. Various disbursements have been estimated as follows: January February March Wages and salaries $250,000 $290,000 $290,000 Rent 27,000 27,000 27,000 Other expenses 10,000 12,000 14,000 In addition, a tax payment of $105,000 is due on January 15, and $40,000 in divi- dends will be declared in January and paid in March. Also, the company has ordered a $75,000 piece of equipment. Delivery is scheduled for early January, and payment will be due in February. The company's projected cash balance at the beginning of January is $100,000, and the company desires to maintain a balance of $100,000 at the end of each month. 5. Prepare a cash budget for Elmwood Manufacturing Company for the first three months of 2017 based on the following information: Estimated Factory Estimated Selling and Month Estimated Sales Overhead Administrative Expenses December 2016 $ 4,600,000 $640,000 $1,250,000 January 2017 6,400,000 650,000 1,275,000 February 2017 11,200,000 670,000 1,285,000 March 2017 8,400,000 670,000 1,310,000 April 2017 7,000,000 680,000 1,300,000 The company has found that approximately 40 percent of sales are collected during the month the sale is made and the remaining 60 percent are collected during the month following the sale. Material purchases are 30 percent of next month's estimated sales, and payments lag these purchases by one month. Labor costs are 35 percent of next month's sales and are paid during the month incurred. Factory overhead and selling and administrative expenses are paid during the month incurred. In addition, a payment for new equipment of $1.5 million is due in February. Also, a tax payment of $1.6 million and a dividend payment of $650,000 are due in March. The company's projected cash balance at the beginning of January is $1.5 million. Furthermore, Elmwood desires to maintain a $750,000 cash balance at the end of each month. 7. Baldwin Products Company anticipates reaching a sales level of $6 million in one year. The company expects earnings after taxes during the next year to equal $400,000. During the past several years, the company has been paying $50,000 in dividends to its stockholders. The company expects to continue this policy for at least the next year. The actual balance sheet and income statement for Baldwin during 2016 follow. Baldwin Products Company Balance Sheet as of December 31, 2016 Cash $ 200,000 Accounts payable $ 600.000 Accounts receivable 400,000 Notes payable 500.000 Inventories 1.200,000 Long-term debt 200.000 Fixed assets, net 500,000 Stockholders' equity 1,000,000 Total assets $2,300,000 Total liabilities and equity $2,300,000 Income Statement for the Year Ending December 31, 2016 Sales $4,000,000 Expenses, including interest and taxes $3.700.000 Earnings after taxes $ 300.000 a. Using the percentage of sales method, calculate the additional financing Baldwin Products will need over the next year at the $6 million sales level. Show the pro forma balance sheet for the company as of December 31, 2017, assuming that a sales level of $6 million is reached. Assume that the additional financing needed is obtained in the form of additional notes payable. b. Suppose that the Baldwin Products' management feels that the average collection period on its additional sales that is, sales over $4 million-will be 60 days, instead of the current level. By what amount will this increase in the average collection period increase the financing needed by the company over the next year? c. If the Baldwin Products' banker requires the company to maintain a current ratio equal to 1.6 or greater, what is the maximum amount of additional financing that can be in the form of bank borrowings (notes payable)? What other potential sources of financing are available to the company