Problem
Consider the following third-quarter budget data for TAP & Brothers:
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TAP & Brothers Third-Quarter Budget Data
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|
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July
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August
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September
|
|
Credit Sales
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253,797
|
266,388
|
288,708
|
|
Credit Purchases
|
97,545
|
117,717
|
135,867
|
|
Wages, Taxes, and Expenses
|
26,306
|
31,756
|
33,673
|
|
Interest
|
7,237
|
7,755
|
7,930
|
|
Equipment Purchases
|
54,604
|
61,507
|
0
|
The company predicts that 4% of its credit sales will never be collected, 30% of its sales will be collected in the month of the sale, and the remaining 66% will be collected in the following month. Credit purchases will be paid in the month following the purchase.
a) In June, credit sales were $138,392, and credit purchases were $102,851
b) July's beginning cash is $184,697
If TAP maintains a policy of always keeping a minimum cash balance of $75,000 as a buffer against uncertainty and forecasting errors, what is the cash surplus/deficit at the end of the quarter (i.e., end of September)?