Lindor Enterprises projects sales for the first three months of the year to be: $10,400 in January, $12,500 in February, and $13,100 in March. Cash receipts are expected to be: $8,580 in January, $11,820 in February, and $12,700 in March.
Lindor Enterprises projects sales for the first three months of the year to be: $10,400 in January, $12,500 in February, and $13,100 in March. Cash receipts are expected to be: $8,580 in January, $11,820 in February, and $12,700 in March.
They anticipate the following cash payments:
| Lindor Enterprises | January | February | March |
|---|---|---|---|
| Direct materials purchased | $3,600 | $4,200 | $4,700 |
| Direct labor costs | $3,300 | $4,000 | $3,500 |
| $570 | $570 | $570 | |
| Utilities for plant | $650 | $650 | $650 |
| Property taxes on plant | $170 | $170 | $170 |
| Depreciation on office | $580 | $580 | $580 |
| Utilities for office | $350 | $350 | $350 |
| Property taxes on office | $180 | $180 | $180 |
| Office salaries | $3,000 | $3,000 | $3,000 |
All costs are paid in the month incurred except: direct materials, which are paid in the month following the purchase; utilities, which are paid in the month after incurred; and property taxes, which are prepaid for the year on January 2. The Accounts Payable and Utilities Payable accounts have a zero balance on January 1.
Also, Lindor Enterprises beginning cash balance is $3,100 and they desire to maintain a minimum ending cash balance of $3,100. Lindor Enterprises borrows cash as needed at the beginning of each month in increments of $900 and repays the amounts borrowed in increments of $900 at the beginning of months when excess cash is available. The interest rate on borrowed amounts is 5% per year. Interest is paid at the beginning of the month on the outstanding balance from the previous month.
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