Reference no: EM133175803

Question - Jane Myers is the manager of an extremely successful gift shop, Jane's Gifts, which is operated for the benefit of local charities. From the data below, she wants a cash budget showing expected cash receipts and disbursements for the month of April, and the cash balance expected as of April 30, 2017.

Banknote due April 10: $90,000 plus $4,500 interest

Depreciation for April: $2,100

Two-year insurance policy due April 14 for renewal: $1,500, to be paid in cash

Planned cash balance, March 31: $80,000

Merchandise purchases for April: $500,000, 40 percent paid in the month of purchase, 60 percent paid in the next month. Payments for merchandise have followed this pattern throughout the year.

Customer receivables as of March 31: $60,000 from February sales, $450,000 from March sales

Payroll for hourly employees in March was $176,000. Due to some major restructuring, the company plans to lay off half its factory employees in April. All factory employees are paid hourly without any severance payment upon termination. The total termination bonus for all employees laid off is $2,000.

Actual rent paid in March was $7,000. This amount was 25% over budget because of a penalty that the company paid. Discussion with the landlord guarantees that regular budgeted rent with no rent penalties will be due in April.

Other expenses for April, payable in April: $45,000

Accrued taxes for April, payable in June: $7,500

Sales for April: $1,000,000, half collected in the month of sale, 40 percent in the next month, 10 percent in the third month. All sales collections have followed this pattern throughout the year.

Accounts payable, March 31, 2017: $460,000

Required - Prepare the cash budget for April 2017, indicating if Jane Myers will have enough cash for the purchase of a microcomputer valued at $10,800 and how much she would need to borrow, if necessary.