The owner of Magnolia Nursery is planning to request a line of credit from his bank. He has estimated that sales will occur as follows:

Month	Sales
November	$18,000
December	15,000
January	10,000
February	22,000
March	45,000
April	50,000
May	55,000
June	35,000

Collection of sales is expected to be 50% within the month of sale, 40% the month following the sale, and 10% the second month following the sale. All sales are made on terms 3/15 net 45. Inventory purchases are forecasted to be 60% of the next month's sales. Payment for this inventory is 30 days after purchase.

Month	Inventory
November	$9,000
December	6,000
January	13,200
February	27,000
March	30,000
April	33,000
May	21,000
June	null

Salaries cost the company $5,000 per month; lease payments are $500 per month; depreciation expense is $400 per month; an income tax payment of $1,500 will be made in December and again in March; and advertising fees of $1,700 will be paid in January.

Cash on hand on January 1st will be $4,000, and the firm's target cash balance of $3,000 will be maintained throughout the cash budget period. Prepare a monthly cash budget for January through May.

a. What line of credit should the firm request? Answer: >$4,455

b. What is the maximum that the firm will have in marketable securities at any one given point in time? Answer: $17,170

Please complete the cash budget:

	Nov	Dec	Jan	Feb	Mar	Apr	May
Sales
During month
Next month
2 months later
Total Collections
Purchases (ref)
Pmt for Purch
Salaries
Lease pmts
Depreciation (non cash exp)
Income tax
Advertising
Net Gain/Loss
Beg Cash Bal
Cumulative Cash Bal
Target Cash Bal
Surplus/Loan