Reference no: EM132485332
You are provided with the following information taken from Splish Brothers Inc.'s March 31, 2022, balance sheet.
Cash$ 12,330
Accounts receivable20,370
Inventory 36,900
Property, plant, and equipment, net of depreciation 120,500
Accounts payable 22,640
Common stock 153,800
Retained earnings12,460
Additional information concerning Splish Brothers Inc. is as follows.
Point 1. Gross profit is 26% of sales.
Point 2. Actual and budgeted sales data:
March (actual)$47,000
April (budgeted)73,100
Point 3. Sales are both cash and credit. Cash collections expected in April are:
March $18,800(40% of $47,000)
April 43,860 (60% of $73,100)
total- $62,660
Point 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 $22,640
Purchases April 28,310
total- $50,950
Point 5. Cash operating costs are anticipated to be $11,510 for the month of April.6. Equipment costing $2,650 will be purchased for cash in April.7. The company wishes to maintain a minimum cash balance of $12,970. 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 14% per year, and interest expense is accrued at the end of the month and paid in the following month.
Question 1: Prepare a cash budget for the month of April. Determine how much cash Splish Brothers Inc. must borrow, or can repay, in April.