Problem:
Oleans, Inc. projects sales to be $100,000; $90,000; $95,000 during the months of August, September, and October respectively. Salaries are projected to be $12,000 plus 5% of sales.
Purchases are made in the month of the sale, are 50% of sales for the month and paid in the month of purchase.
A tax payment of $60,000 and an equipment purchase of $20,000 will be made in September. All sales transactions are for cash, and a ($20,000) cash balance (yes, this is a negative ($20,000) starts the month of August. The firm maintains a minimum target and of month balance of $6,000. There is no limit as to how high the cash balance can be.
Calculate the ending cash balance after any deficit is financed to achieve the target level for each of the three months.