The actual sales and purchases for Xenocore, Inc., for September and October 2012, along with its forecast sales and purchases for the period November 2012 through April 2013, follow. The firm makes20% of all sales for cash and collects on 40% of its sales in each of the 2 months following the sale. Other cash inflows are expected to be $12,000 in September and April, $15,000 in January and March, and $27,000 in February. The firm pays cash for 10% of its purchases. It pays for 50% of its purchases in the following month and for 40% of its purchases 2 months later. Year Month Sales Purchases 2015 September $210,000 $120,000 2015 October $250,000 $150,000 2015 November $170,000 $140,000 2015 December $160,000 $100,000 2016 January $140,000 $80,000 2016 February $180,000 $110,000 2016 March $200,000 $100,000 2016 April $250,000 $90,000 Wages and salaries amount to 20% of the preceding month's sales. Rent of $20,000 per month must be paid. Interest payments of $10,000 are due in January and April. A principal payment of $30,000 is also due in April. The firm expects to pay cash dividends of $20,000 in January and April. Taxes of $80,000 are due in April. The firm also intends to make a $25,000 cash purchase of fixed assets in December a. Assuming that the firm has a cash balance of $22,000 at the beginning of November, determine the end-of-month cash balances for each month, November through April. b. Assuming that the firm wishes to maintain a $15,000 minimum cash balance, determine the required total financing or excess cash balance for each month, November through April. c. If the firm were requesting a line of credit to cover needed financing for the period November to April, how large would this line have to be? Explain your answer. Sept. Oct Nov Dec Jan Feb Mar April Opening Balance Add: Cash Sales Add Sales Add Sales Less Cash Purchases Less Purchases Less Purchases Less Wages & Salaries Less Rent Add Inflows Less Interest Less Cash Dividends Less taxes 22,000 34,000 84,000 100,000 140,000 48,000 75000 50000 20,000 -93,000 -177,000 32,000 28,000 100,000 68,000 68,000 64,000 100,000 80,000 60,000 56,000 70000 50000 34000 32000 20,000 20,000 -255000 -337,000 -322,000 36,000 40000 50000 64,000 56000 72000 56,000 72000 80000 110,000 10000 9000 40,000 32000 44000 40,000 55000 50000 28,000 36000 40000 20,000 20,000 20,000 12,000 10,000 20,000 80,000 Balance -93,000 -177,000 -255,000 -337,000 -322,000 -381,000 Financing Required The actual sales and purchases for Xenocore, Inc., for September and October 2012, along with its forecast sales and purchases for the period November 2012 through April 2013, follow. The firm makes20% of all sales for cash and collects on 40% of its sales in each of the 2 months following the sale. Other cash inflows are expected to be $12,000 in September and April, $15,000 in January and March, and $27,000 in February. The firm pays cash for 10% of its purchases. It pays for 50% of its purchases in the following month and for 40% of its purchases 2 months later. Year Month Sales Purchases 2015 September $210,000 $120,000 2015 October $250,000 $150,000 2015 November $170,000 $140,000 2015 December $160,000 $100,000 2016 January $140,000 $80,000 2016 February $180,000 $110,000 2016 March $200,000 $100,000 2016 April $250,000 $90,000 Wages and salaries amount to 20% of the preceding month's sales. Rent of $20,000 per month must be paid. Interest payments of $10,000 are due in January and April. A principal payment of $30,000 is also due in April. The firm expects to pay cash dividends of $20,000 in January and April. Taxes of $80,000 are due in April. The firm also intends to make a $25,000 cash purchase of fixed assets in December a. Assuming that the firm has a cash balance of $22,000 at the beginning of November, determine the end-of-month cash balances for each month, November through April. b. Assuming that the firm wishes to maintain a $15,000 minimum cash balance, determine the required total financing or excess cash balance for each month, November through April. c. If the firm were requesting a line of credit to cover needed financing for the period November to April, how large would this line have to be? Explain your answer. Sept. Oct Nov Dec Jan Feb Mar April Opening Balance Add: Cash Sales Add Sales Add Sales Less Cash Purchases Less Purchases Less Purchases Less Wages & Salaries Less Rent Add Inflows Less Interest Less Cash Dividends Less taxes 22,000 34,000 84,000 100,000 140,000 48,000 75000 50000 20,000 -93,000 -177,000 32,000 28,000 100,000 68,000 68,000 64,000 100,000 80,000 60,000 56,000 70000 50000 34000 32000 20,000 20,000 -255000 -337,000 -322,000 36,000 40000 50000 64,000 56000 72000 56,000 72000 80000 110,000 10000 9000 40,000 32000 44000 40,000 55000 50000 28,000 36000 40000 20,000 20,000 20,000 12,000 10,000 20,000 80,000 Balance -93,000 -177,000 -255,000 -337,000 -322,000 -381,000 Financing Required