Q2 (20 marks) Hakuna Matana Surrey Inc. reports a cash balance of $12,000 as of June 1. During the month they paid $16,000 on account, $13,000 for wages, and $1,000 for other expense items. The company maintains a minimum cash balance of $10,000. Sales for the firm for April, May, and June are $15,000, $22,000, and $18,750, respectively. The company collects 40% of sales in the month of sale, 50% in the following month, and 10% in the second month following the month of sale. Compute the cash balance at the end of the month. Should the company arrange some financing to maintain a certain balance? If yes, what are those sources? Solution