You have been engaged as a consultant to design a master budget model and then to assist Helping Hand Corp. in making some management decisions based on that master budget. Helping Hand is a small, rapidly growing wholesaler of consumer electronic products. The companys main product lines are small kitchen appliances and power tools. The marketing manager has recently completed a sales forecast. She believes the companys sales will increase by 2 percent each month over the previous months sales from December 2019 through March 2020. Then sales are expected to remain constant for several months. Helping Hands projected balance sheet as of December 31, 2019 is as follows: Cash $ 140,000 Accounts receivable 202,851 Marketable securities 55,000 Inventory 35,894 Buildings and equipment (net of accumulated depreciation) 610,000 Total assets $ 1,043,745 Accounts payable $ 124,488 Sales commissions payable 7,038 Bond interest payable 5,000 Property taxes payable 0 Bonds payable (3%; due in 2023) 500,000 Common stock 250,000 Retained earnings 157,219 Total liabilities and stockholders' equity $ 1,043,745 The following information has been accumulated to assist with preparing the master budget for the first quarter of 2020: 1) Projected sales for November 2019 are $230,000. Credit sales are typically 85% of total sales. Helping Hands credit experience indicates that 12% of credit sales are collected during the month of sale, 74% in the month following the sale, and 14% in the second month following the sale. Experience shows the remaining credit sales are uncollectible. 2) Helping Hands cost of goods sold generally runs at 60% of sales. Inventory is purchased on account and 12% of each months purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the company attempts to have inventory on hand at the end of each month equal to 25% of the next months projected cost of goods sold. 3) The controller has estimated that Helping Hands other monthly expenses will be as follows: Sales salaries $ 30,000 Advertising and promotion 6,000 Administrative salaries 11,000 Depreciation 8,000 Interest on bonds 1,250 Property taxes 4,000 In addition, sales commissions run at the rate of 3.0 percent of sales. Sales commissions are paid in the month following the month of sale. 4) The company president has indicated that the company should invest $200,000 in an automated inventory-handling system to control the movement of inventory in the companys warehouse just after the new year begins. The president would like to purchase the equipment primarily from the companys cash and marketable securities. However, the president believes the company should have a minimum cash balance of $20,000 at the end of each month. If necessary, the remainder of the equipment purchase may be financed using short-term credit from a local bank. The minimum lending period for such a loan is three months (this means the earliest the loan can be paid off is March 31st). The current short-term interest rates are 6 percent per year and are expected to remain at this rate through the time the equipment is purchased. If a loan is necessary, the entire amount required for the quarter must be borrowed on January 1st and must be in a $1,000 increment. The loan is a short term loan and the president has decided it should be paid off at the end of the first quarter if possible. If the entire amount cannot be repaid at March 31st, any partial payment will be paid at the end of the first quarter and in a $1,000 increment. 5) Helping Hands board of directors has indicated an intention to declare and pay dividends of $100,000 on the last day of each quarter. 6) The interest on any short-term borrowing will be paid when the loan is repaid. Interest on Helping Hands bonds is paid semiannually on February 28 and August 31 for the preceding six-month period. 7) Property taxes are paid quarterly on March 31, June 30, September 30, and December 31 for the preceding three-month period. Required: Build a model to forecast Helping Hand Corps cash balance at March 31, 2020. Your model must contain the following master budget schedules. Round all amounts to the nearest dollar. Your model should allow you to change any of the assumptions provided above and easily recalculate the ending cash balance at March 31, 2020. The assumptions may be on a separate worksheet but all of the schedules below must be on one worksheet.

Question5-

Summary cash budget: 2020 January February March 1st Quarter Cash receipts (sch 2) Less: Cash disbursements (sch 4) Change in cash balance during period due to operations Sale of marketable securities (1/2/20) Proceeds from bank loan (1/2/20) Purchase of equipment Repayment of bank loan (3/31/20) Interest on bank loan Payment of dividends Change in cash balance during the month Beginning cash balance Ending cash balance

Question 6)

Prepare a memo to the president of Helping Hands Corp with at least two recommendations on how the company can ensure it completes the first quarter of 2020 with the minimum required cash balance. You should provide a plan to support your recommendation. For example, if you recommend an increase in sales, how can this be attained. Be specific. You should provide specific financial information for your recommendations utilizing your model (include a model for each of your recommendations). For example, if the company does X, the change in ending cash will be Y. Your model will become the property of Helping Hands Corp. and should be easy to use. Not buying the equipment is not an option. All assumptions are based on the purchase of the new equipment.