Reference no: EM132927737

Question - You are provided with the following information taken from Shamrock, Inc.'s March 31, 2022, balance sheet.

Cash $12,500

Accounts receivable 20,900

Inventory 36,330

Property, plant, and equipment, net of depreciation 124,600

Accounts payable 22,990

Common stock 154,500

Retained earnings 11,940

Additional information concerning Shamrock, Inc. is as follows.

1. Gross profit is 26% of sales.

2. Actual and budgeted sales data:

March (actual) $47,400

April (budgeted) 71,600

3. Sales are both cash and credit. Cash collections expected in April are:

March $18,960 (40% of $47,400)

April 42,960 (60% of $71,600)

$61,920

4. Half of a month's purchases are paid for in the month of purchase and half in the following month. Cash disbursements expected in April are:

Purchases March $22,990

Purchases April 28,770

$51,760

5. Cash operating costs are anticipated to be $11,600 for the month of April.

6. Equipment costing $2,710 will be purchased for cash in April.

7. The company wishes to maintain a minimum cash balance of $12,290. An open line of credit is available at the bank. All borrowing is done at the beginning of the month, and all repayments are made at the end of the month. The interest rate is 12% per year, and interest expense is accrued at the end of the month and paid in the following month.

Required - Make a cash budget for the month of April. Determine how much cash Shamrock, Inc. must borrow, or can repay, in April.