Reference no: EM131995809

Lipman Auto Parts, a family-owned auto parts store, began January with $10,100 cash. Management forecasts that collections from credit customers will be $11,500 in January and $14,600 in February. The store is scheduled to receive $5,500 cash on a business note receivable in January. Projected cash payments include inventory purchases ($12,600 in January and $13,800 in February) and operating expenses ($3,000 each month). Lipman Auto Parts? bank requires a $10,000 minimum balance in the store?s checking account. At the end of any month when the account balance dips below $10,000, the bank automatically extends credit to the store in multiples of $1,000. Lipman Auto Parts borrows as little as possible and pays back loans in quarterly installments of $1,500, plus 5% interest on the entire unpaid principal. The first payment occurs three months after the loan.