Question

E22A-35 (similar to) Northem Auto Parts, a famly-owned auto parts store, began January wih $10 100 cash. Management forecasts thatl collections om oredi custiomers will be $11,800 in January and $14.900 in February. The stone is scheduled to receive $4 50 cash on abusiness noie fecer atienJanuary Prgeeted caih pay meres ndude inventory purchases ($12.200 i, January and $12300 in Febrary) and Ming and Sdnatab gexpenses 200 oach moti Northern Auto Parts bank as-ttle as poss ble and pays back loans in quanerly rslabneres o'$1500 plus 3% APR itareat on the ertro upad priepal The frit prmere oons three mots ฮ Requirements 1. Prepare Northem Auto Parts cash budget for January and February 2. How much cash will Northem Auto Parts borrow in February it collections from customers that month totail $13,900 insead of $14,900 the ban Cash Budget January and February January February Cash avaliable Cash paryfments: Total cash payments Ending cash balance

Answer 1

January Februa Opening Balance Cash collections Temporary Credit Line Cash Available 10,000 16,300 10,900 14,900 1,000 26,800 26,300 Cash Payments: Inventory Purchases Selling and Admin expenses 12,200-13,300 3,200 3,200 Cash payments 15,400 16,500 Closing Cash Balancee 10,900 10,300

The Company would have to borrow $ 2000 if the collections from customers were 13,900 instead of 14,900.