# Project #9722 - FINANCE

1. Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl’s Doll Shop. Business has been good, but Koehl has frequently run out of cash. This has necessitated late payment on certain orders, which, in turn, is beginning to cause a problem with

suppliers. Koehl plans to borrow from the bank to have cash ready as needed, but first she

needs a forecast of just how much she must borrow. Accordingly, she has asked you to prepare

a cash budget for the critical period around Christmas, when needs will be especially high.

Sales are made on a cash basis only. Koehl’s purchases must be paid for during the following

month. Koehl pays herself a salary of \$4,800 per month, and the rent is \$2,000 per month. In

addition, she must make a tax payment of \$12,000 in December. The current cash on hand (on

December 1) is \$400, but Koehl has agreed to maintain an average bank balance of \$6,000—

this is her target cash balance. (Disregard till cash, which is insignificant because Koehl keeps

only a small amount on hand in order to lessen the chances of robbery.)

The estimated sales and purchases for December, January, and February are shown below.

Purchases during November amounted to \$140,000.

SALES                          PURCHASES

December       \$160,000                       \$40,000

January                 40,000                        40,000

February              60,000                        40,000

a. Prepare a cash budget for December, January, and February.

b. Now, suppose Koehl were to start selling on a credit basis on December 1, giving customers

30 days to pay. All customers accept these terms, and all other facts in the problem are unchanged.

What would the company’s loan requirements be at the end of December in this

case? (Hint: The calculations required to answer this question are minimal.)

2.  Do problem 17-13 part a. on page 545-546 on a spreadsheet. Below are the given inputs.

3.Do the problems 18-1, 18-2, 18-3 and turn it into the dropbox as an Excel file.

 Subject Business Due By (Pacific Time) 07/28/2013 12:00 am
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