You are provided with the following information taken from Langerhan Inc's March 31, 2014, balance sheet. Cash $ 12,262
Accounts receivable 20,915
Inventory 36,611
Property, plant, and equipment, net of depreciation 124,845
Accounts payable 23,074
Common stock 152,938
Retained earnings 2,386
Additional information concerning Langerhan Inc. is as follows.
1.Gross profit is 25% of sales.
2.Actual and budgeted sales data:
March (actual) $47,999
April (budgeted) 72,067
3.Cash collections expected in April are:
March $19,200(40% of $47,999)
April 43,240 (60% of $72,067)
$62,440
4.Half of a month's purchases are paid for in the month of purchase and half in the following month.
Cash disbursements expected in April are:
Purchases March $23,074
Purchases April 28,400
$51,474
5.Cash operating costs are anticipated to be $11,730 for the month of April.
6.Equipment costing $2,533 will be purchased for cash in April.
7. The company wishes to maintain a minimum cash balance of $12,600.
An open line of credit is available at the bank.
All borrowing is done at the beginning of the month, and all repayments are made at the end of the month.
The interest rate is 13% per year, and interest expense is accrued at the end of the month and paid in the following month.
Prepare a cash budget for the month of April. Determine how much cash Langerhan Inc. must borrow, or can repay, in April.
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