Selected financial data of Future Technologies, Inc., at December 31, Year 1, are shown below:

The following additional information is available for the year ended December 31, Year 1:

For Year 2, Future Technologies anticipates a 5% sales growth. To counterbalance this lower than expected growth rate, the company implements cost-cutting strategies to reduce cost of goods sold by 2% from the Year 1 level. All other expenses are expected to increase by 5%. Expected net income for Year 2 is $20,000. Ending Year 2 inventory is estimated at $90,000 and there is no expected balance in accrued taxes. The company requires $175,000 to buy new equipment in Year 2.
The minimum desired cash balance is $30,000. The company offers a discount of 2% of sales if payment is received in 10 days. It is expected that 10% of sales take advantage of this discount, while the remaining 90% are collected (on average) in 60 days.

Required:
Prepare a what-if analysis of cash needs (cash forecast) for Year 2. Will Future Technologies need to borrowmoney?

42,000 90,000 Cash Accounts receivable. Inventory Fixed assets. Accumulated depreciation.. 25,800 Accounts payable78,000 Notes payable.21,000 Accrued taxes.. Capital stock Retained earnings 35,400 39,000 120,000 10,800 120,000 .. Sales. Cost of goods sold (excluding depreciation) Purchases $450,000 312,000 210,000 Depreciation $15,000 Net income 12,000