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The ACME Toy Company has projected sales as follows: ...

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Accounting

The ACME Toy Company has projected sales as follows:
Sales September October November December January
$ 60,000 $ 70,000 $ 80,000 $ 90,000 $ 85,000
Other information:
1. ACME collects 65% of its sales in the month of the sale, 25% in the second month and 10% in the third month.
2. ACME purchases and pays for raw materials one month in advance of its sales. The purchases are 60% of sales.
3. ACME pays $7,000 rent each month for its factory.
4. ACME pays $6,000 other costs each month.
5. A tax prepayment of $45,000 is due in October.
6. ACME has a line of credit with it's local bank for $500,000 at 10% interest, and must maintain a bank balance of $10,000
7. At September 30th, it had borrowed $40,000 on its LOC, and had a bank balance of $15,000
a. Prepare a cash budget for the last quarter of the year (October - December)
b. Will the ACME have its LOC paid off by 12/31?

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