RLN Corporation is preparing its cash budget for the next fiscal quarter. Several pieces of data which may be useful for that task are shown below.

Beginning cash balance $ 6,000

Depreciation 8,000

Support department costs 12,000

Plant asset purchases 17,000

Wages expense (direct labor) 19,000

Cash paid to direct labor employees 22,000

Inventory purchases 25,000

Payments to inventory suppliers 40,000

Sales revenue 80,000

Cash collected from customers 95,000

Support department costs do not include depreciation. The company plans to purchase the plant asset at the end of the year, making a 30% down payment and financing the remainder with a 6%, 180-day note payable. RLN wishes to maintain an ending cash balance of $7,200; any excess cash is invested in short-term securities. A zero rate of return is budgeted for short-term securities. Cash deficiencies are made up through short-term borrowing (30%) and capital stock issuances (70%).

a. Use the relevant data to prepare RLNs cash budget.

b. Explain why the managers of RLN Corporation cannot be certain that achieving the cash budget results calculated in part (a).