Bill Joyce, CEO of Joyce and Associates, expects the firm to have $6,000 cash on hand at the end of 2009. He estimates the total revenues in 2010 to be $250,000, of which $175,000 will be collected during the year. Payroll and fringe benefits constitute the bulk of the firm's expenditures and will amount to $160,000 in 2010. Other operating expenses, including $5,000 for depreciation and $3,000 for property taxes, are $18,000. The property tax expense is an increase of $500 from the current year. In addition, Bill Joyce plans to update the office equipment for $24,000 in 2010. He expects the payment in 2010 for the office equipment will be $6,000. The county in which the firm is located requires payment of at least one-half of property taxes before the end of the year and the remainder before June 30 of the following year. The desired ending cash balance is $6,000.

Required

Can Bill meet the minimum cash balance? Show calculations.

 

Expected opening cash balance, 2010							$6,000
Estimated revenues, 2010							$250,000
Collections of revenues, 2010							$175,000
Payroll & Fringe Benefits, 2010							$160,000
Other operating expenses, 2010:
Depreciation expense							$5,000
Property taxes							$3,000
Other (misc.)							$10,000
Projected 2010 increase in property taxes							$500
Purchase of office equipment (fixed assets)							$24,000
Payment in 2010 for office equipment puchase							$6,000
Property tax payment %, prior to end of year							50%
Minimum cash balance required							$6,000