EXERCISE 10–6 Reproduced below are selected financial data at the end of Year 5 and forecasts for the end of Year 6 for Top Corporation:

Year 6 Year 6 Account Year 5 (Forecast) Account Year 5 (Forecast)

Cash ....................................... $ 35,000 ? Accounts payable ..... $ 65,000 $122,000 Accounts receivable................ 75,000 ? Notes payable .......... 17,500 15,000 Inventory................................. 32,000 $ 75,000 Accrued taxes .......... 9,000 0 Fixed assets............................ 100,000 100,000 Capital stock ........... 100,000 100,000 Accumulated depreciation ...... 21,500 25,000 Additional forecast estimates for Year 6:

Sales.................... $412,500 Net income .............................. $10,000 Cost of sales........ 70% of sales forecast Days’ sales in receivables ....... 90 days Required:

Assuming all expenses are paid in cash when incurred and that cost of sales is exclusive of depreciation, forecast the ending cash balance for Year 6. If Top Corp. wishes to maintain a minimum cash balance of $50,000, must it borrow?