You are a relatively recent hire to the hartz & co.

You are a relatively recent hire to the Hartz & Co., a local manufacturer of plumbing supply products. You have been asked to prepare for a presentation to the company’s management a condensed cash-flow statement for the months of November and December, 2013.                                                     The cash balance at November 1st was $51,000. It is the company’s policy to maintain a minimum cash balance of $51,000 at the end of each month. Cash receipts (from cash sales and collection of accounts receivable) are projected to be $563,700 for November and $455,000 for December. Cash disbursements (sales commissions, advertising, delivery expense, wages, utilities, etc.), prior to financing activity, are scheduled to be $554,000 in November and $500,700 in December.                                                     Borrowing, when needed, is done at the beginning of the month – in increments of $1,000. The annual interest rate on any such loans is estimated to be 13.00%. Interest on any outstanding loans is paid in cash at the end of the month. Interest on any outstanding loans is paid in cash at the end of the month. Repayments of principal (if any, in whole dollars) are assumed to occur at the end of the month. As of November 1st, the company has a $51,000 short-term loan from the local bank.                                                     Required   Use the preceding information to prepare the cash budget for November and December. (Hint: The December 31st cash balance should be $51,483.)                                                                         Data Input                                                   Cash balance, November 1st       $51,000                                       Minimum required cash balance     $51,000                                       Budgeted cash receipts:                                               November         $563,700                                       December         $455,000                                       Budgeted cash disbursements:                                             November         $554,000                                       December         $500,700                                       Interest rate on borrowings       13.0% per year                                     Short-term loan payable, as of November 1st   $51,000                                       Borrowings in increments of       $1,000                                                                                         Solution                                                             Select from dropdown                                               Select from dropdown                                                                                                         November     December                               Cash balance, beginning         Formula     Formula                               Plus: Cash receipts           Formula     Formula                               Total Cash Available         Formula     Formula                                                                                   Cash disbursements, prior to financing       Formula     Formula                               Plus: Minimum cash balance (given)       Formula     Formula                               Total Cash Needed           Formula     Formula                                                                                   Excess (deficiency of) cash, before financing effects   Formula     Formula                                                                                   Financing:                                                 Balance Short term loan beginning of month   Formula     Formula                                 Short-term borrowing, beginning of the month*     Formula     Formula                               Repayments (loan principal), end of the month     Formula     Formula                               Balance Short term loan end of month   Formula     Formula                                 Interest (@13.00%), paid in cash @ end of the month   Formula     Formula                               Total effects of financing         Formula     Formula                                                                                   Ending cash balance         Formula     Formula                                                                                                                                       * Hint: the borrowing is at the beginning of the month                                         therefore your algebra needs the following:                                           what you borrow needs to include the interest to be paid                                         interest to be paid needs to be a function of the amount borrowed and any existing balance                                 therefore a circular reference problem                                           so, use High School algebra                                             amount to borrow = AM                                               amount of interest = I                                               formulate two linear equations                                               AM = f() → AM =   -I35+I =  -I35+(H38+AM)*H18/12 IF(I35-H38*H18/12-(I29-I33)*H18/12<0, Borrow, Not Borrow)                       I = f() → I =  (H38+I39)*H18/12         Borrow = Roundup in multiples of borrowing amounts                     solve for AM and I               Not Borrow = 0                                                                                                                                                                                         The repayment is at the end of the month                                           You need two IF statements:                                             IF (There is a loan balance , IF (Excess cash, Make a repayment , Do not make repayment) , Do not make repayment)                             Make a repayment =  MIN (Amount borrowed or The Amount of excess cash available)                                   Make the repayment in whole dollars – use INT                                                                                                                                                                                                     Test your model’s algebra by entering various amounts for Cash receipts:                                     e.g. 0                                                   100,000                                                   500,000                                                   750,000                                              

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