You are a relatively recent hire to the hartz & co.

You are a relatively recent hire to the Hartz & Co., a local manufacturer of plumbing supply products. You have been asked to prepare for a presentation to the company’s management a condensed cash-flow statement for the months of November and December, 2013.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

The cash balance at November 1st was $51,000. It is the company’s policy to maintain a minimum cash balance of $51,000 at the end of each month. Cash receipts (from cash sales and collection of accounts receivable) are projected to be $563,700 for November and $455,000 for December. Cash disbursements (sales commissions, advertising, delivery expense, wages, utilities, etc.), prior to financing activity, are scheduled to be $554,000 in November and $500,700 in December.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Borrowing, when needed, is done at the beginning of the month – in increments of $1,000. The annual interest rate on any such loans is estimated to be 13.00%. Interest on any outstanding loans is paid in cash at the end of the month. Interest on any outstanding loans is paid in cash at the end of the month. Repayments of principal (if any, in whole dollars) are assumed to occur at the end of the month. As of November 1st, the company has a $51,000 short-term loan from the local bank.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Required   Use the preceding information to prepare the cash budget for November and December. (Hint: The December 31st cash balance should be $51,483.)
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Data Input
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Cash balance, November 1st
 
 
 
$51,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Minimum required cash balance
 
 
$51,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Budgeted cash receipts:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
November
 
 
 
 
$563,700
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
December
 
 
 
 
$455,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Budgeted cash disbursements:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
November
 
 
 
 
$554,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
December
 
 
 
 
$500,700
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Interest rate on borrowings
 
 
 
13.0%
per year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Short-term loan payable, as of November 1st
 
$51,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Borrowings in increments of
 
 
 
$1,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Solution
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
Select from dropdown
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
Select from dropdown
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
November
 
 
December
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Cash balance, beginning
 
 
 
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Plus: Cash receipts
 
 
 
 
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Total Cash Available
 
 
 
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Cash disbursements, prior to financing
 
 
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Plus: Minimum cash balance (given)
 
 
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Total Cash Needed
 
 
 
 
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Excess (deficiency of) cash, before financing effects
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Financing:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Balance Short term loan beginning of month
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Short-term borrowing, beginning of the month*
 
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Repayments (loan principal), end of the month
 
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Balance Short term loan end of month
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Interest (@13.00%), paid in cash @ end of the month
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Total effects of financing
 
 
 
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Ending cash balance
 
 
 
 
Formula
 
 
Formula
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
* Hint: the borrowing is at the beginning of the month
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
therefore your algebra needs the following:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
what you borrow needs to include the interest to be paid
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
interest to be paid needs to be a function of the amount borrowed and any existing balance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
therefore a circular reference problem
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
so, use High School algebra
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
amount to borrow = AM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
amount of interest = I
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
formulate two linear equations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
AM = f()

AM = 
 -I35+I
=
 -I35+(H38+AM)*H18/12
IF(I35-H38*H18/12-(I29-I33)*H18/12