The president of Univax, Inc., has just approached the company's bank seeking short-term financing

The president of Univax, Inc., has just approached the company's bank seeking short-term financing

for the coming year, Year 2.  Univax is a distributor of commercial vacuum cleaners.  The bank has

stated that the loan request must be accompanied by a detailed cash budget that shows the quarters

in which financing will be needed, as well as the amounts that will be needed and the quarters in

which repayments can be made. 

To provide this information for the bank, the president has directed that the following data be gathered

from which a cash budget can be prepared:

a.	Budgeted sales and merchandise purchases for Year 2, as well as actual sales and purchases for
	the last quarter of Year 1, are as follows:
								Merchandise
	Year 1:				Sales		Purchases
		Fourth quarter actual			$300,000		$180,000
	Year 2:
		First quarter, estimated		$400,000		$260,000
		Second quarter, estimated		$500,000		$310,000
		Third quarter, estimated		$600,000		$370,000
		Fourth quarter estimated		$480,000		$240,000
b.	The company typically collects 33% of a quarter's sales before the quarter ends and another 65%
	in the following quarter.  The remainder is uncollectible.  This pattern of collections is now being
	experienced in the actual data for the Year 1 fourth quarter.
c.	Some 20% of a quarter's merchandise purchases are paid for within the quarter.  The remainder is
	paid in the follow quarter.
d.	Selling & Administrative Expenses for Year 2 are budgeted at $90,000 per quarter plus 12% of sales.
	Of the fixed amount, $20,000 each quarter is depreciation.
e.	The company will pay $10,000 in cash dividends each quarter.
f.	Land purchases will be made as follows during the year:  $80,000 in the second quarter and $48,500
	in the third quarter.
g.	The Cash account contained $20,000 at the end of Year 1.  The company must maintain a minimum
	cash balance of at least $18,000.
	Any borrowing will take place at the beginning of a quarter, and any repayment will be made at the end of a quarter at an annual interest rate of 10%, Interest is paid only when principal is repaid. All borrowing and all repayments of principal must be in round $1,000 amounts, Interest payments can be in any amount.
i.	At present, the company has no loans outstanding.

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