Transcript Company Is Preparing a Cash Budget for February

question 29

Essay

Transcript Company is preparing a cash budget for February.The company has $150,000 cash at the beginning of February and anticipates total sales of $800,000, consisting of 25% cash sales and 75% credit card sales.The bank charges 3 percent for credit card transactions.The company sets its selling price at 160 percent of the cost of purchases and pays for each month's purchases at the end of the month.Other cash disbursements are $20,000 per month plus 4% of total sales.In addition, a $600,000 note will be due in February for equipment purchased last August.Transcript Company has an agreement with its bank to maintain a cash balance of $100,000.
Required: What amount, if any, must the company borrow during February?

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Definitions:

Retires

The act of leaving one's job and ceasing to work, typically due to reaching a certain age or for health reasons.

Liability on Debts

The legal responsibility to pay money owed to creditors, either by an individual or a company.

Capital Contribution

Funds or assets provided by investors or partners to a company or partnership to support its operations and growth.

Partnership Assets

Properties or resources owned by a partnership that are used for the purpose of carrying on the partnership business.