Thanks so much I am so sorry yes ONE figure was off here is the new part with the fixed let me know if you need more thanks so so much for your help!
The Sharpe Corporations projected sales for the first eight months of 2011 are as follows:
Of Sharpe's sales, 10 percent is for cash, another 60 percent is collected in the month following
sale, and 30 percent is collected in the second month following sale. November and December
sales for 2010 were $220,900 and $174,800, respectively.
Sharpe purchases its raw materials two months in advance of its sales equal to 60 percent of their
final sales price. The supplier is paid one month after it makes delivery. For example, purchases
for April sales are made in February and payment is made in March.
In addition, Sharpe pays $9,800 per month for rent and $20,900 each month for other expenditures.
Tax prepayments of $21,800 are made each quarter, beginning in March.
The company's cash balance at December 31, 2010, was $22,000; a minimum balance of $15,000
must be maintained at all times. Assume that any short-term financing needed to maintain the cash
balance is paid off in the month following the month of financing if sufficient funds are available.
Interest on short-term loans (10 percent) is paid monthly. Borrowing to meet estimated monthly
cash needs takes place at the beginning of the month. Thus, if in the month of April the firm expects
to have a need for an additional $63,980, these funds would be borrowed at the beginning of April
with interest of $533 (i.e., 10% x 1/12 x $63,980) owed for April and paid at the beginning of May.
a. Prepare a cash budget for Sharpe covering the first seven months of 2011.
b. Sharpe has $200,200 in notes payable due in July that must be repaid or renegotiated for
an extension. Will the firm have ample cash to repay the notes?