Wickford Company's financial managers are meeting with the company's bank to renew their line of credit and discuss their investment needs. They have prepared the company's operating cash budget for the last six months of the year.

The following budget assumptions were used to construct the budget:

Wickford's total sales for each month were first calculated in the sales budget and are reflected on the first line of the cash budget. Wickford's sales are made on credit with terms of 2/10, net 30. Wickford'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 45% of Wickford's finished product. The purchases are generally made one month in advance of the sale, and Wickford pays its suppliers in 30 days. Accordingly, if July sales are forecasted at $1,210 million, then purchases during June would be $545 ($1,210 million x 0.45), and this amount would be paid in July. Other cash expenses include wages and salaries at 17% 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 Wickford's targeted cash balance is $300, and the estimated cash on hand on July 1 is $295.

Wickford Company Cash Budget For the Six Months Ended December 31, Year 1 $ millions) October November December June $1,078 495 August September $1,133 520 August September $1,045 $1,155 535 Credit sales $1,100 $1,188 $1,210 Credit purchases October November December Cash receipts Collections from this month's sales Collections from previous month's sales Collections from sales two months previously 291 751 278 296 722 736 772 108 $1,110 $1,130 $1,155 Total cash receipts Cash disbursements Payments for credit purchases Wages and salaries Rent Other expenses Taxes Payment for plant construction $1,095 $1,184 500 535 187 189 193 | 206 1,100 | $845 $1,904 $840 $856 Total cash disbursements Net cash flow (Receipts - disbursements) Beginning cash balance Ending cash balance Target (minimum) cash balance Surplus (shortfall) cash $789 $306 526 $832 $231 $245 $315 $328 598 $926 300 $626 -$794 $283 300 $526 $598 300 | $226 $532 $298 Use the information provided in the budget to complete the following sentences Wickford 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, Wickford will to end the year with a cash and a cash . Wickford 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