The following trial balance was drawn from the records of Havel Company as of October 1, year 2. Cash$16,000 Accounts receivable 60,000 Inventory 40,000 Store equipment 200,000 Accumulated depreciation $76,800 Accounts payable 72,000 Line of credit loan 100,000 Common stock 50,000 Retained earnings 17,200 Totals$316,000 $316,000 c. Indicate whether Havel will need to borrow money during October by preparing October's Cash Budget. (Negative amounts should be indicated by a minus sign.)

Question Completion:

Sales for October are expected to be $180,000, consisting of $40,000 in cash and $140,000 on credit. The company expects sales to increase at the rate of 10 percent per month. All accounts receivable are collected in the month following the sale.

Havel Company

Havel may need to borrow money to be able to repay the Line of credit loan, pay salaries, and other office expenses, including interest on the line of credit loan.

Explanation:

a) Data and Calculations:

Havel Company

Trial Balance

As of October 1, Year 2:

Cash                          $16,000

Accounts receivable  60,000

Inventory                    40,000

Store equipment     200,000

Accumulated depreciation      $76,800

Accounts payable                      72,000

Line of credit loan                    100,000

Common stock                          50,000

Retained earnings                      17,200

Totals                    $316,000 $316,000

Expected sales in October = $180,000

Cash sales = $40,000

Credit sales = $140,000

Cash collection: month following the sale

Cash Budget for October 30, Year 2:

Beginning balance             $16,000

Cash receipts

Cash sales                           40,000

Accounts receivable           72,000

Total cash available        $128,000

Cash payments:

Accounts payable              72,000

Line of credit repayment 100,000

Total payments              $172,000

Ending cash balance     ($44,000)

answer; i believe the correct answer is (a) purchase of treasury stock;

fractionally backed paper money

fiat money

paper money

metallic money