The following budget assumptions were used to construct the budget: Capel's total sales for each month were first calculated in the sales budget and are reflected on the first line of the cash budget. . Capel's sales are made on credit with terms of 2/10, net 30. Capel's experience is that 25% is collected from customers who take advantage of the discount, 65% is collected in the second month, and the last 10% is collected in the third month after the sale. The budget assumes that there are no bad debts. The cost of materials averages 50% of Capel's finished product. The purchases are generally made one month in advance of the sale, and Capel pays its suppliers in 30 days. Accordingly, if July sales are forecasted at $1,210 million, then purchases during June would be $605 ($1,210 million x 0.50), and this amount would be paid in July other cash expenses include wages and salaries at 18% of sales, monthly rent of $44 million, and other expenses at 5% of sales. Estimated tax payments of $64 million and $67 million are required to be paid on July 15 and October 15, respectively. In addition, a $1,100 million payment for a new plant must be made in September. Assume that Capel's targeted cash balance is $200, and the estimated cash on hand on July 1 is $225. Use the preceding information to fill in the missing amounts in the following cash budget. Capel Company Cash Budget For the Six Months Ended December 31, Year 1 (s millions) December May $1,045 June $1,078 550 July $1,100 August September $1,111 $1,133 567 578 Credit sales Credit purchases October $1,155 594 November $1188 $1,210 605 July August September October November December Cash receipts Collections from this month's sales Collections from previous month's sales Collections from sales two months previously Total cash receipts 272 715 278 722 110 295 772 108 283 736 111 $1,130 291 751 113 $1,155 116 $1,184 $1,095 $1,110 550 198 605 594 556 200 567 204 218 Cash disbursements Payments for credit purchases Wages and salaries Rent Other expenses Taxes Payment for plant construction Total cash disbursements Net cash flow (Receipts - disbursements) Beginning cash balance Ending cash balance Target (minimum) cash balance Surplus (shortfall) cash 1,100 $1,972 $911 $911 $928 $165 $175 -$862 629 225 -233 $390 200 $190 $239 390 $629 200 $429 -$58 200 -$258 $244 -58 $186 200 -$14 $256 185 $442 200 $242 Use the information provided in the budget to complete the following sentences. of $ Capel Company will be able to invest in short-term marketable securities in some months and will need to borrow to cover cash requirements in others. In the last six months of the year, Capel will to end the year with a cash of $ and a cash Capel Company will want a credit line of at least $ to cover the month with the greatest shortfall, and the financial managers can tell the bank to expect that they will be able to invest up to $ in short-term marketable securities. The following budget assumptions were used to construct the budget: Capel's total sales for each month were first calculated in the sales budget and are reflected on the first line of the cash budget. . Capel's sales are made on credit with terms of 2/10, net 30. Capel's experience is that 25% is collected from customers who take advantage of the discount, 65% is collected in the second month, and the last 10% is collected in the third month after the sale. The budget assumes that there are no bad debts. The cost of materials averages 50% of Capel's finished product. The purchases are generally made one month in advance of the sale, and Capel pays its suppliers in 30 days. Accordingly, if July sales are forecasted at $1,210 million, then purchases during June would be $605 ($1,210 million x 0.50), and this amount would be paid in July other cash expenses include wages and salaries at 18% of sales, monthly rent of $44 million, and other expenses at 5% of sales. Estimated tax payments of $64 million and $67 million are required to be paid on July 15 and October 15, respectively. In addition, a $1,100 million payment for a new plant must be made in September. Assume that Capel's targeted cash balance is $200, and the estimated cash on hand on July 1 is $225. Use the preceding information to fill in the missing amounts in the following cash budget. Capel Company Cash Budget For the Six Months Ended December 31, Year 1 (s millions) December May $1,045 June $1,078 550 July $1,100 August September $1,111 $1,133 567 578 Credit sales Credit purchases October $1,155 594 November $1188 $1,210 605 July August September October November December Cash receipts Collections from this month's sales Collections from previous month's sales Collections from sales two months previously Total cash receipts 272 715 278 722 110 295 772 108 283 736 111 $1,130 291 751 113 $1,155 116 $1,184 $1,095 $1,110 550 198 605 594 556 200 567 204 218 Cash disbursements Payments for credit purchases Wages and salaries Rent Other expenses Taxes Payment for plant construction Total cash disbursements Net cash flow (Receipts - disbursements) Beginning cash balance Ending cash balance Target (minimum) cash balance Surplus (shortfall) cash 1,100 $1,972 $911 $911 $928 $165 $175 -$862 629 225 -233 $390 200 $190 $239 390 $629 200 $429 -$58 200 -$258 $244 -58 $186 200 -$14 $256 185 $442 200 $242 Use the information provided in the budget to complete the following sentences. of $ Capel Company will be able to invest in short-term marketable securities in some months and will need to borrow to cover cash requirements in others. In the last six months of the year, Capel will to end the year with a cash of $ and a cash Capel Company will want a credit line of at least $ to cover the month with the greatest shortfall, and the financial managers can tell the bank to expect that they will be able to invest up to $ in short-term marketable securities