Reproduced below are selected financial data at the end of Year 6 and forecasts for the end of Year 7 for AlMasa Company: Account Year 6 Year 7 (Forecast) Cash $42,000 ? Accounts receivable 90,000 ? Inventory 38,400 $90,000 Fixed assets 120,000 120,000 Accumulated depreciation 25,800 30,000 Accounts payable 78,000 146,400 Notes payable 21,000 18,000 Accrued taxes 10,800 0 Capital stock 120,000 120,000 Additional forecast estimates for Year 7: Sales $495,000 Net Income $12,000 Cost of sales 55% of sales forecast Days’ sales in receivables 60 days Required: Assuming all expenses are paid in cash when incurred and that cost of sales is exclusive of depreciation, forecast the ending cash balance for year 7. If AlMasa Company wishes to maintain a minimum cash balance of $60,000, must the company borrow?
Reproduced below are selected financial data at the end of Year 6 and forecasts for the end of Year 7 for AlMasa Company:
|
Account |
Year 6 |
Year 7 ( |
|
Cash |
$42,000 |
? |
|
|
90,000 |
? |
|
Inventory |
38,400 |
$90,000 |
|
Fixed assets |
120,000 |
120,000 |
|
Accumulated depreciation |
25,800 |
30,000 |
|
Accounts payable |
78,000 |
146,400 |
|
Notes payable |
21,000 |
18,000 |
|
Accrued taxes |
10,800 |
0 |
|
Capital stock |
120,000 |
120,000 |
Additional forecast estimates for Year 7:
Sales $495,000
Net Income $12,000
Cost of sales 55% of sales forecast
Days’ sales in receivables 60 days
Required:
Assuming all expenses are paid in cash when incurred and that cost of sales is exclusive of depreciation, forecast the ending cash balance for year 7. If AlMasa Company wishes to maintain a minimum cash balance of $60,000, must the company borrow?
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