Dan Davis, the chief financial officer, is responsible for The Furniture Marts cash budget for 2010. The budget will help Davis determine the amount of long-term borrowing needed to end the year with a cash balance of $130,000. Davis’s assistants have assembled budget data for 2010, which the computer printed in alphabetical order. Not all the data items reproduced below are used in preparing the cash budget.
(Assumed Data) (In thousands)
Actual cash balance, December 31, 2009.................. $ 130
Budgeted total assets................................................. 22,377
Budgeted total current assets..................................... 7,976
Budgeted total current liabilities............................... 4,260
Budgeted total liabilities............................................ 11,088
Budgeted total stockholders equity........................... 7,197
Collections from customers....................................... 21,800
Dividend payments................................................... 317
Issuance of stock...................................................... 647
Net income................................................................ 1,183
Payment of long-term and short-term debt................ 980
Payment of operating expenses................................. 2,349
Purchases of inventory items..................................... 14,545
Purchase of property and equipment......................... 1,528

Requirements
1. Prepare the cash budget of The Furniture Mart, Inc.
2. Compute The Furniture Marts budgeted current ratio and debt ratio at December 31, 2010. Based on these ratio values, and on the cash budget, would you lend $100,000 to The Furniture Mart? Give the reason for your decision.