Problem1: Master Budget with Supporting Schedules You have just been hired as a management trainee by Cravat Sales Company, a nationwide distributor of a designer’s silk ties. The company has an exclusive franchise on the distribution of the ties, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the management team. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are anxious to make a favourable impression on the president and have assembled the information below. The company desires a minimum ending cash balance each month of $10,000. The ties are sold to retailers for $8 each. Recent and forecasted sales in units are as follows: January (actual) . . . . 20,000 . . . . . June . . . . . . . . . . . . 60,000 February (actual) . . . 24,000 . . . . . July . . . . . . . . . . . . . 40,000 March (actual) . . . . . 28,000 . . . . . August. . . . . . . . . . . 36,000 April . . . . . . . . . . . . 35,000 . . . . . . May . . . . . . . . . . . 45,000 . . . . . . . September . . . . . . . 32,000 The large buildup in sales before and during June is due to Father’s Day. Ending inventories are sup- posed to equal 90% of the next month’s sales in units. The ties cost the company $5 each. Purchases are paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25% of a month’s sales are collected by month-end. An additional 50% is collected in the following month, and the remaining 25% is collected in the second month following sale. Bad debts have been negligible. The company’s monthly operating expenses are given below: Variable: Sales commissions ... $1 per tie Fixed: Wages and salaries . . . . . . . $22,000 Utilities . . . . . . . . . . $14,000 . . . . . . . Insurance . . .. . . . . . . . . . . . $1,200 Depreciation . . . . . . $1,500 . . . . . . . Miscellaneous . . . . . $3,000 . . . . . . All operating expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. Land will be purchased during May for $25,000 cash. The company declares dividends of $12,000 each quarter, payable in the first month of the following quarter. The company’s balance sheet at March 31 is given below: Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,000 Accounts receivable ($48,000 February sales; $168,000 March sales). . . . . . . . . . . . . . . . . . . . . . . . Inventory (31,500 units) . . . . . . . . . . . . . . . . . . . . . . . . . 216,000 157,500 Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,400 Fixed assets, net of depreciation . . . . . . . . . . . . . . . . . . 172,700 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $574,600 Liabilities and Stockholders’ Equity Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 85,750 Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176,850 Assets The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $40,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $10,000 in cash. Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets: a. A sales budget by month and in total. b. A schedule of expected cash collections from sales, by month and in total. c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. e. A cash budgets. Show the budget by month and in total. f. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. g. A budgeted balance sheet as of June 30
Problem1: Master Budget with Supporting Schedules You have just been hired as a management trainee by Cravat Sales Company, a nationwide distributor of a designer’s silk ties. The company has an exclusive franchise on the distribution of the ties, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the management team. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are anxious to make a favourable impression on the president and have assembled the information below. The company desires a minimum ending cash balance each month of $10,000. The ties are sold to retailers for $8 each. Recent and forecasted sales in units are as follows: January (actual) . . . . 20,000 . . . . . June . . . . . . . . . . . . 60,000 February (actual) . . . 24,000 . . . . . July . . . . . . . . . . . . . 40,000 March (actual) . . . . . 28,000 . . . . . August. . . . . . . . . . . 36,000 April . . . . . . . . . . . . 35,000 . . . . . . May . . . . . . . . . . . 45,000 . . . . . . . September . . . . . . . 32,000 The large buildup in sales before and during June is due to Father’s Day. Ending inventories are sup- posed to equal 90% of the next month’s sales in units. The ties cost the company $5 each. Purchases are paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25% of a month’s sales are collected by month-end. An additional 50% is collected in the following month, and the remaining 25% is collected in the second month following sale. Bad debts have been negligible. The company’s monthly operating expenses are given below: Variable: Sales commissions ... $1 per tie Fixed: Wages and salaries . . . . . . . $22,000 Utilities . . . . . . . . . . $14,000 . . . . . . . Insurance . . .. . . . . . . . . . . . $1,200 Depreciation . . . . . . $1,500 . . . . . . . Miscellaneous . . . . . $3,000 . . . . . . All operating expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. Land will be purchased during May for $25,000 cash. The company declares dividends of $12,000 each quarter, payable in the first month of the following quarter. The company’s balance sheet at March 31 is given below: Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,000 Accounts receivable ($48,000 February sales; $168,000 March sales). . . . . . . . . . . . . . . . . . . . . . . . Inventory (31,500 units) . . . . . . . . . . . . . . . . . . . . . . . . . 216,000 157,500 Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,400 Fixed assets, net of depreciation . . . . . . . . . . . . . . . . . . 172,700 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $574,600 Liabilities and Stockholders’ Equity Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 85,750 Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176,850 Assets The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $40,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $10,000 in cash. Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets: a. A sales budget by month and in total. b. A schedule of expected cash collections from sales, by month and in total. c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. e. A cash budgets. Show the budget by month and in total. f. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. g. A budgeted balance sheet as of June 30
Related questions
I only need help with these parts of the problem. I've alreadydone the rest of my homework, but cannot understand what I'm doingwrong.
#1-part D
#2-The Financing Section(I cannot figure out how to find May'sborrowing, and June's interest/repayments
#3-The interest expense
#4-The whole problem.
You have just been hired as a management trainee by Cravat SalesCompany, a nationwide distributor of a designer�s silk ties. Thecompany has an exclusive franchise on the distribution of the ties,and sales have grown so rapidly over the last few years that it hasbecome necessary to add new members to the management team. Youhave been given responsibility for all planning and budgeting. Yourfirst assignment is to prepare a master budget for the next threemonths, starting April 1. You are anxious to make a favorableimpression on the president and have assembled the informationbelow.
The company desires a minimumending cash balance each month of $10,000. The ties are sold toretailers for $8 each. Recent and forecasted sales in units are asfollows: |
| January(actual) | 25,000 | June | 67,000 |
| February(actual) | 33,000 | July | 47,000 |
| March (actual) | 35,000 | August | 40,000 |
| April | 36,000 | September | 39,000 |
| May | 54,000 | ||
The large buildup in sales before and during June is due toFather�s Day. Ending inventories are supposed to equal 90% of thenext month�s sales in units. The ties cost the company $5 each. |
Purchases are paid for as follows:50% in the month of purchase and the remaining 50% in the followingmonth. All sales are on credit, with no discount, and payablewithin 15 days. The company has found, however, that only 25% of amonth�s sales are collected by month-end. An additional 50% iscollected in the following month, and the remaining 25% iscollected in the second month following sale. Bad debts have beennegligible. |
| The company�s monthly sellingand administrative expenses are given below: |
| Variable: | |||
| Sales commissions | $ 1 | per tie | |
| Fixed: | |||
| Wages and salaries | $ | 22,700 | |
| Utilities | $ | 16,900 | |
| Insurance | $ | 1,000 | |
| Depreciation | $ | 1,500 | |
| Miscellaneous | $ | 3,100 | |
All selling and administrativeexpenses are paid during the month, in cash, with the exception ofdepreciation and insurance expired. Land will be purchased duringMay for $21,000 cash. The company declares dividends of $12,000each quarter, payable in the first month of the following quarter.The company�s balance sheet at March 31 is given below: |
| Assets | ||
| Cash | $ | 15,000 |
| Accounts receivable($66,000 February sales; $210,000 March sales) | 276,000 | |
| Inventory (32,400units) | 162,000 | |
| Prepaidinsurance | 12,000 | |
| Fixed assets, net ofdepreciation | 123,150 | |
| Total assets | $ | 588,150 |
| Liabilities and Stockholders� Equity | ||
| Accountspayable | $ | 89,750 |
| Dividendspayable | 12,000 | |
| Capital stock | 300,000 | |
| Retainedearnings | 186,400 | |
| Total liabilitiesand stockholders� equity | $ | 588,150 |
The company has an agreement witha bank that allows it to borrow in increments of $1,000 at thebeginning of each month, up to a total loan balance of $130,000.The interest rate on these loans is 1% per month, and forsimplicity, we will assume that interest is not compounded. At theend of the quarter, the company would pay the bank all of theaccumulated interest on the loan and as much of the loan aspossible (in increments of $1,000), while still retaining at least$10,000 in cash. |
| Required: | |
| 1. | Prepare a master budget for thethree-month period ending June 30. Include the following detailedbudgets: |
| a. | A sales budget by month and intotal. (2 marks) (Omit the "$" sign inyour response.) |
| Cravat Sales Company Sales Budget | ||||
| April | May | June | Quarter | |
| Total sales | $ | $ | $ | $ |
| b. | A schedule of expected cash collections from sales, by month andin total. (8 marks)(Leave no cells blank -be certain to enter "0" wherever required. Omit the "$" sign inyour response.) |
| Cravat Sales Company Schedule of Expected Cash Collections | ||||||||
| April | May | June | Quarter | |||||
| February sales | $ | $ | $ | $ | ||||
| March sales | ||||||||
| April sales | ||||||||
| May sales | ||||||||
| June sales | ||||||||
| Total cashcollections | $ | $ | $ | $ | ||||
| c. | A merchandise purchases budgetin units and in dollars. Show the budget by month and intotal.(10 marks) (Input all amounts aspositive values. Omit the "$" sign in yourresponse.) |
| Cravat Sales Company Merchandise Purchases Budget | ||||||||
| April | May | June | Quarter | |||||
| Budgeted sales inunits | ||||||||
| (Click toselect) Add Deduct : (Click to select) Budgeted ending inventoryBeginning inventory | ||||||||
| Total needs | ||||||||
| (Click toselect) Deduct Add : (Click to select) Beginning inventory Budgetedending inventory | ||||||||
| Required unitpurchases | ||||||||
| Unit cost | $ | $ | $ | $ | ||||
| Required dollarpurchases | $ | $ | $ | $ | ||||
| d. | A schedule of expected cash disbursements for merchandisepurchases, by month and in total. (6.50 marks)(Leave no cells blank - be certain to enter "0" whereverrequired. Omit the "$" sign in your response.) |
| Cravat Sales Company Budgeted Cash Disbursements for Merchandise Purchases | ||||||||
| April | May | June | Quarter | |||||
| March purchases | $ | $ | $ | $ | ||||
| April purchases | ||||||||
| May purchases | ||||||||
| June purchases | ||||||||
| Total cashpayments | $ | $ | $ | $ | ||||
| 2. | A cash budget. Show the budget by month and intotal.(23.50 marks) (Input all amounts aspositive values except cash deficiency, repayments and interestwhich should be indicated by a minus sign. Leave no cells blank -be certain to enter "0" wherever required. Omit the "$" sign inyour response) |
| Cravat Sales Company Cash Budget For the Three Months Ending June 30 | ||||||||
| April | May | June | Quarter | |||||
| Cash balance,beginning | $ | $ | $ | $ | ||||
| Add receipts fromcustomers | ||||||||
| Total cashavailable | ||||||||
| Lessdisbursements: | ||||||||
| Purchase ofinventory | ||||||||
| Sales commissions | ||||||||
| Salaries and wages | ||||||||
| Utilities | ||||||||
| Miscellaneous | ||||||||
| Dividends paid | ||||||||
| Land purchases | ||||||||
| Totaldisbursements | ||||||||
| Excess (deficiency)of receipts over disbursements | ||||||||
| Financing: | ||||||||
| Borrowings | ||||||||
| Repayments | ||||||||
| Interest | ||||||||
| Total financing | ||||||||
| Cash balance,ending | $ | $ | $ | $ | ||||
| 3. | A budgeted income statement for the three-month period endingJune 30. Use the contribution approach. (10 marks)(Input all amounts as positive values. Omit the "$" sign inyour response.) |
| Cravat Sales Company Budgeted Income Statement For the Three Months Ended June 30 | ||||
| (Click toselect) Cost of goods sold Insurance expenses Contribution marginNet income (loss) Net operating income (loss) Utilities Salesrevenue | $ | |||
| Variableexpenses: | ||||
| (Click to select)Commissions Cost of goods sold Salaries Net operating incomeAdvertising Utilities Rent | $ | |||
| (Click to select)Utilities Commissions Salaries Rent Net operating incomeAdvertising Cost of goods sold | ||||
| (Click toselect) Utilities Commissions Contribution margin Sales revenue Netoperating income (loss) Cost of goods sold Interest expense | ||||
| Fixedexpenses: | ||||
| (Click to select)Utilities Sales Net operating income (loss) Depreciation Wages andsalaries Miscellaneous Insurance expenses | ||||
| (Click to select)Sales Utilities Depreciation Net operating income (loss)Miscellaneous Wages and salaries Insurance expenses | ||||
| (Click to select)Insurance expenses Depreciation Wages and salaries MiscellaneousNet operating income (loss) Sales Utilities | ||||
| (Click to select)Sales Net operating income (loss) Utilities Insurance expensesMiscellaneous Depreciation Wages and salaries | ||||
| (Click to select)Miscellaneous Insurance expenses Sales Net operating income (loss)Utilities Wages and salaries Depreciation | ||||
| (Click toselect) Sales revenue Wages and salaries Net operating income(loss) Net income (loss) Contribution margin Cost of goods soldUtilities | ||||
| (Click toselect) Interest expense Rent Prepaid insurance Sales commissionsInsurance Net operating income (loss) Utilities | ||||
| (Click toselect) Net income (loss) Contribution margin Sales revenueCommissions Wages and salaries Utilities Cost of goods sold | $ | |||
| 4. | A budgeted balance sheet as ofJune 30. (12 marks) (Besure to list the assets and liabilities in orderof their liquidity. Omit the "$" sign in yourresponse.) |
| Cravat Sales Company Budgeted Balance Sheet June 30 | ||
| Assets | ||
| (Click toselect) Fixed assets, net of depreciation Accounts receivable CashInventory Prepaid insurance | $ | |
| (Click toselect) Fixed assets, net of depreciation Cash Prepaid insuranceAccounts receivable Inventory | ||
| (Click toselect) Accounts receivable Fixed assets, net of depreciationPrepaid insurance Cash Inventory | ||
| (Click toselect) Fixed assets, net of depreciation Prepaid insuranceInventory Cash Accounts receivable | ||
| (Click toselect) Dividends payable Accounts payable, purchases Fixed assets,net of depreciation Capital stock Retained earnings | ||
| Total assets | $ | |
| Liabilities and Stockholders� Equity | ||
| (Click toselect) Cash Capital stock Accounts payable, purchases Dividendspayable Retained earnings | $ | |
| (Click toselect) Retained earnings Loans payable, bank Capital stockDividends payable Accounts payable, purchases | ||
| (Click toselect) Retained earnings Accounts payable, purchases Capital stockDividends payable Loans payable, bank | ||
| (Click toselect) Cash Dividends payable Loans payable, bank Capital stockAccounts payable, purchases | ||
| (Click toselect) Cash Loans payable, bank Retained earnings Dividendspayable Accounts payable, purchases | ||
| Total liabilitiesand stockholders� equity | $ | |
You are a Consultant for the professional service firm, BUSI2083 LLP. Your firm specializes in providing a wide variety ofinternal business solutions for different clients. One of thepartners in your practice is impressed with the work you havecompleted to date and would like to give you additionalresponsibility. She has asked you to take the lead on thisengagement with the hope that a successful outcome may lead to yourpromotion to Senior Consultant. You take the background files fromthe partner and get started.
Perfect Stitch Replicaâs Limited, a nationwide distributor oflow-cost imitation clothing, has an exclusive agreement for thedistribution of the clothing. Sales have grown so rapidly over thelast few years that it has become necessary to add new members tothe management team. To date, the company's budgeting practiceshave been minimal, and at times, the company has experienced a cashshortage. You have been given responsibility for all planning andbudgeting. Your first assignment is to prepare a master budget forthe next three months, starting April 1. You are anxious to make afavourable impression and have assembled the information below.
Additional Information
The clothing is sold to retailers for an average price of $10each. Recent and forecasted sales in units are as follows:
Recent and forecast sales: | |
January (actual) | 20,000 |
February (actual) | 26,000 |
March (actual) | 40,000 |
April | 65,000 |
May | 100,000 |
June | 50,000 |
July | 30,000 |
August | 28,000 |
September | 25,000 |
Ending inventories should be equal to 40% of the next month'ssales in units.
The average cost of the clothing is $4 each. Purchases are paidfor as follows: 50% in the month of purchase and the remaining 50%in the following month. All sales are on credit, with no discount,and payable within 15 days. The company has found, however, thatonly 20% of a month's sales are collected by month-end. Anadditional 70% is collected in the following month, and theremaining 10% is collected in the second month following sale. Baddebts have been negligible.
The company's monthly operating expenses are given below:
Variable: | |
Sales commissions (percentage of sales) | 4% |
Fixed: | |
Advertising | $200,000 |
Rent | $18,000 |
Wages and salaries | $106,000 |
Utilities | $7,000 |
Insurance | $3,000 |
Depreciation | $14,000 |
All operating expenses are paid during the month, in cash, withthe exception of depreciation and insurance. Insurance is paid onan annual basis, in November of each year. The company plans topurchase $16,000 in new equipment during May and $40,000 in newequipment during June; both purchases will be paid in cash. Thecompany declares dividends of $15,000 each quarter, payable in thefirst month of the following quarter. The company's balance sheetat March 31 is given below:
Balance Sheet at March 31: | |
Assets | |
Cash | $ 74,000 |
Accounts receivable* | 346,000 |
Inventory** | 104,000 |
Prepaid insurance | 21,000 |
Fixed assets, net of depreciation | 950,000 |
Total assets | $1,495,000 |
Liabilities and Shareholders' Equity | |
Accounts payable | $ 100,000 |
Dividends payable | 15,000 |
Common shares | 800,000 |
Retained earnings | 580,000 |
Total liabilities and shareholders' equity | $ 1,495,000 |
Notes to Balance Sheet: | |
*February sales | $ 26,000 |
March sales | 320,000 |
$ 346,000 | |
**Number of units: | |
Dollar amount of inventory | 104,000 |
Divide by cost per unit | $ 4 |
Number of units | 26,000 |
The company wants a minimum ending cash balance each month of$50,000. All borrowing is done at the beginning of the month; anyrepayments are made at the end of the month. The company has anagreement with a bank that allows it to borrow in increments of$1,000 at the beginning of each month. The interest rate on theseloans is 1% per month, and for simplicity, assume that interest isnot compounded. At the end of the quarter, the company would paythe bank all of the accumulated interest on the loan and as much ofthe loan as possible (in increments of $1,000), while stillretaining at least $50,000 in cash.
Prepare the following budgets for the first three months of2016:
A sales budget by month and in total
A schedule of expected cash collections from sales, by month andin total.
A merchandise purchases budget in units and in dollars. Show thebudget by month and in total.
A schedule of expected cash disbursements for merchandisepurchases, by month and in total.
A cash budget. Show the budget by month and in total.
A budgeted Income Statement for the three-month period endingJune 30. Use the variable costing approach.
Provide a budgeted Balance Sheet as at June 30th.
You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below.
The company sells many styles of earrings, but all are sold for the same priceâ$15 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):
| January (actual) | 21,800 | June (budget) | 51,800 |
| February (actual) | 27,800 | July (budget) | 31,800 |
| March (actual) | 41,800 | August (budget) | 29,800 |
| April (budget) | 66,800 | September (budget) | 26,800 |
| May (budget) | 101,800 | ||
The concentration of sales before and during May is due to Motherâs Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.
Suppliers are paid $4.90 for a pair of earrings. One-half of a monthâs purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a monthâs sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.
Monthly operating expenses for the company are given below:
| Variable: | |||
| Sales commissions | 4 | % of sales | |
| Fixed: | |||
| Advertising | $ | 290,000 | |
| Rent | $ | 27,000 | |
| Salaries | $ | 124,000 | |
| Utilities | $ | 11,500 | |
| Insurance | $ | 3,900 | |
| Depreciation | $ | 23,000 | |
Insurance is paid on an annual basis, in November of each year.
The company plans to purchase $20,500 in new equipment during May and $49,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $21,750 each quarter, payable in the first month of the following quarter.
Selected items from the companyâs March 31 balance sheet are as follows:
| Cash | $ | 83,000 |
| Accounts receivable ($41,700 February sales; $501,600 March sales) | 543,300 | |
| Inventory | 130,928 | |
| Accounts payable | 109,000 | |
| Dividends payable | 21,750 | |
The company maintains a minimum cash balance of $59,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.
The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $59,000 in cash.
Required:
Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules:
2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $59,000.
