[Ladynred]

Of Sharpe's sales, 10% is for cash, another 60% is collected in the month following the sale, and 30% is collected in the second month following sale. Nov and Dec sales for 2010 were $440,000 and $175,400, respectively. Sharpe purchases its raw material two months in advance of its sales equal to 60% of their final sales price. The supplier is paid one month after it makes delivery. In addition, Sharpe pays $9,100 per month for rent and $20,700 each month for other expenditures. Tax prepayments of $22,800 are made each quarter, beginning in March. The company's cash balance at Dec 31, 2010 was $22,600; a minimum balance of $15,000 must be maintained at all times. Assume that any short-term financing needed to maintainthe cash balance is paid off in the month following the momth of financing in sufficient funds are available. Interest on short-term loans (11 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 $59,840, these funds would be borrowed at the beginning of April with interest of $549 owed for April being paid at the beginning of May.

A. Prpare a cash budget for Sharpe covering the first seven months of 2011.
B. Sharpe has $200,700 in notes payable due in July that be repaid or renegotiated for an extension. Will the firm have sufficient cash to repay the notes?