Question 1 (10 points) David just finished his first year of university and has realized how expensive it is (too much Spin Dip @ Wilf's)! In order to prepare for next year, David has decided to start his own landscaping business and hopes to maintain a minimum cash balance of $5,000 in his bank account at all times. He is starting April with $720 set aside in his bank account to start his business. David's exams were at the end of the exam period so he wasn't able to start doing client work until May. Total sales for May, as the business was just starting, were $6,000. However, as a way to entice clients to work with David versus his competitors he offers his services on credit. Approximately 30% of people pay within the month of sale and the remaining 70% of people pay in the month following the sale. After completing a forecast, David assumes sales are going to pick up at an alarming rate with a hot summer on the horizon. David assumes his sales in June will be $18,000, as he starts to build his clientele. For the months of July and August David has forecasted sales to be $18,000, and $20,000 respectively. However, this business does come at a cost. David has to purchase his seeds, fertilizer, and plants one month in advance of the actual sale to ensure the items will be in stock. The seeds, fertilizer, and plants cost about 40% of his net sales. He has to pay 30% up front for purchasing the seeds, fertilizer, and plants, 50% in the month following the purchase, and 20% the 2nd month after the purchase. In May, David decided he would need to buy some equipment to start his business and this cost him $4,500. As his business began to grown he realized his initial equipment was not going to be enough and would need to purchase $16,000 more of equipment, equally split between July and August. If David has a surplus in any given month his financial advisor has advised him to repay any outstanding loans, as interest is calculated at an annual rate of 8% due to the high-risk of this new venture. The interest payment is payable the month after (ie. If he borrows $5,000 in January the interest payment would be made in February). Given the information provided create a cash budget worksheet for David's summer of work (May, June, July, and August). Use the boxes below to enter the total receipts in each of the following months, chronologically (i.e., the result for first month listed should go in the first box, the second in the second box, etc.). May June July August Round to a whole dollar, no decimals, commas, or dollar signs. A A Use the boxes below to enter the total disbursements for purchases in each of the following months, chronologically (i.e., the result for the first month listed should go in the first box, the second in the second box, etc.). Use the boxes below to enter the total disbursements for purchases in each of the following months, chronologically (i.e., the result for the first month listed should go in the first box, the second in the second box, etc.). May June July August Round to a whole dollar, no decimals, commas, or dollar signs. May June July August Use the boxes below to enter the beginning cash balance in each of the following months, chronologically (i.e., the result for first month listed should go in the first box, the second in the second box, etc.). May June July August Round to a whole dollar, no decimals, commas, or dollar signs, and enter as a positive number. A A/ Use the boxes below to enter the total equipment in each of the following months, chronologically (i.e., the result for first month listed should go in the first box, the second in the second box, etc.). Use the boxes below to enter the total equipment in each of the following months, chronologically (i.e., the result for first month listed should go in the first box, the second in the second box, etc.). May June July August Round to a whole dollar, no decimals, commas, or dollar signs, and enter as a positive number. A A A Use the boxes below to enter the interest expense in each of the following months, chronologically (i.e., the result for first month listed should go in the first box, the second in the second box, etc.). May June July August Round to a whole dollar, no decimals, commas, or dollar signs, and enter as a positive number. Interest should be entered as a positive number if it occurs; otherwise, if no interest is required, enter 0 A Use the boxes below to enter David's borrowing (if any) in each of the following months, chronologically (i.e., the result for first month listed should go in the first box, the second in the second box, etc.). May June July August Round to a whole dollar, no decimals, commas, or dollar signs. Borrowing should be entered as a positive number if it occurs; otherwise, if no borrowing is required, enter 0. A Use the boxes below to enter David's ending cash balance in each of the following months, chronologically (i.e., the result for first month listed should go in the first box, the second in the second box, etc.). May June July Round to a whole dollar, no decimals, commas, or dollar signs. August A/ A A