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Question 4 17 pts On September 30, the Parker Corporation had a balance of $50,500 in its cash account. Additional information: o Actual sales: August September $180,000 200,000 o Budgeted sales: October November $195,000 210,000 10% of each month's sales are cash sales. Of the remaining credit sales, collections are 70% in the month of the sale and 25% in the following month. The remaining 5% is uncollectible. Inventory costs average 75% of sales (i.e., October sales will require $146,500 of inventory and November sales will require $157,500 of inventory). Monthly purchases of inventory are budgeted at 100% of next month's projected inventory needs. Thirty percent of the purchases are paid for in the month of purchase, with the remaining 70% paid in the month following purchase. Inventory purchases in September totaled $117,000. o Selling and administrative expenses are $50,000 per month. Of this amount, $12,000 is depreciation. o The company plans to purchase a new piece of production equipment costing $40,000 at the end of October. o All obligations, except inventory purchases, are paid in the month incurred. o Parker desires a minimum cash balance of $50,000. Short-term borrowing in increments of $1,000 is available to cover any shortfalls. Borrowings are made at the beginning of the month and repayments are at the end of the month. Interest is 18% per year, and interest payments must be made whenever there is a principal repayment. o Dividends of $10,000 were declared in September and will be paid in October. REQUIRED: Prepare a cash budget for October, consisting of cash receipts, disbursements and any borrowing/repayment, such that the minimum cash balance is not less than $50,000. If an amount is 0, you must enter 0; do not leave the cell blank. ENTER ALL AMOUNTS IN WHOLE DOLLARS. October Beginning Cash Balance Collections from Sales Total Cash Available. Less Disbursements: Inventory Purchases. Selling & Administrative Expenses.... Income Taxes Paid... Equipment (Sales) Purchases........ Dividends Paid.. Total Cash Disbursements........... Excess (Inadequacy) of Cash... Minimum Cash Balance............. Cash Available (Needed) Financing: Borrowing..... Repayments..... Interest.... Total Financing. Ending Cash Balance

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