Shia LeBeuf, a financial analyst for Transformers Company, has prepared the following sales and cash disbursement estimates for the period Feb - Jun of the current year:
Month Sales Cash Disbursements
Feb $500 $400
Mar $600 $300
Apr $400 $600
May $200 $500
Jun $200 $200
LeBeuf notes that, historically, 30% of sales have been for cash. Of credit sales, 70% are collected one month after the sale, the remaining 30% are collected 2 months after the sale. The firm wishes to maintain a minimum ending balance in its cash account of $25. Balances above that amount would be invested in short term government securities (marketable securities), whereas any deficits would be financed through short-term bank borrowing (notes payable). The beginning cash balance at Apr 1 is $115.
a) Prepare a cash budget for Apr, May and Jun
b) Decide how much financing, if any, at a maximum, would Transformers require to meet its obligations during this 3 month period. (please show your work).