Transcript Company Is Preparing a Cash Budget for February

Transcript Company is preparing a cash budget for February.
• The company has $150,000 cash at the beginning of February and anticipates total sales of $800,000, consisting of 25% cash sales and 75% bank credit-card sales.
• The bank charges 3 percent for credit-card deposits.
• The firm sets its selling price at 160 percent of the cost of purchases and pays the cost of each month's sales at the end of the month.
• Operating expenses are $45,000 per month, of which $25,000 is depreciation expense.Selling expenses (commissions) amount to 4 percent of total sales dollars.
• In addition, a $600,000 note will be due in February for equipment purchased last August.In addition to the principal amount, interest for one month (at 12% per annum) will be paid in February.
• Transcript Company has an agreement with its bank to maintain a minimum cash balance of $100,000.
Required: Prepare in good form a cash budget that shows the amount, if any, that the company must borrow during February.Separate your budget, at a minimum, into the following categories:
Beginning Cash Balance
Operating Cash Flows (Both Inflows and Outflows)
Cash Balance before Financing Effects
Financing Activity
Ending Cash Balance

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