[de.williams]

Harrison Printing has projected its sales for the first eight months of 2004 as follows:January $100,000 April $300,000 July $200,000
February 120,000 May 275,000 August 180,000
March 150,000 June 200,000
Harrison collects 20 percent of its sales in the month of the sale, 50 percent in the month following
the sale, and the remaining 30 percent two months following the sale. During November
and December of 2003 Harrison's sales were $220,000 and $175,000, respectively.
Harrison purchases raw materials two months in advance of its sales equal to 65 percent of its
final sales. The supplier is paid one month after delivery. Thus, purchases for April sales are
made in February and payment is made in March. In addition, Harrison pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter beginning in March. The company's cash balance as of December 31, 2003, was $22,000; a minimum balance of $20,000 must be maintained at all times to satisfy the firm's bank line of credit agreement. Harrison has arranged with its bank for short-term credit at an interest rate of 12 percent per annum (1 percent per month) to be paid monthly. Borrowing to meet estimated monthly cash needs takes place at the
end of the month, and interest is not paid until the end of the following month. Consequently,
if the firm were to need to borrow $50,000 during the month of April, then it would pay $500
(= .01 × $50,000) in interest during May. Finally, Harrison follows a policy of repaying its outstanding
short-term debt in any month in which its cash balance exceeds the minimum desired
balance of $20,000.
a. Harrison needs to know what its cash requirements will be for the next six months so
that it can renegotiate the terms of its short-term credit agreement with its bank, if necessary.
To evaluate this problem, the firm plans to evaluate the impact of a �}20 percent
variation in its monthly sales efforts. Prepare a six-month cash budget for Harrison and
use it to evaluate the firm's cash needs.
b. Harrison has a $200,000 note due in June. Will the firm have sufficient cash to repay the
loan?

[Just Looking]

Please read this announcement:
https://www.askmehelpdesk.com/financ...-b-u-font.html
I will walk you through this if you need help, but you need to do the work so you understand.


To start, you need to prepare a spreadsheet with columns for the months, and lines for the entries.

The first line would have the sales amount listed under each month. The second line would use the info that 20% is received in the month of sale - so 20% of the sales number you show will be a positive amount of cash flow. The third line would show that 50% is collected in the following month - for example, under February you would enter 50% of the January sales. You continue with lines for each item they gave you in the question, inputting the number under the correct month. Once you do that, you will be able to add your columns for the cash budget and answer the questions a and b. Let me know if you need help once you've attempted the above. Thanks.