Problem $9-44$

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Part $5$ of $9$

believes that Intercoastal needs to keep a minimum cash balance of $$15,000.$ If necessary, the remainder of the equipment purchases will be financed using short$-$term credit from a local bank. The minimum period for such a loan is three months. Rafael believes short$-$term interest rates will be $10$ percent per year at the time of the equipment purchases. If a loan is necessary, Davies$-$Lowry has decided it should be paid off by the end of the first quarter if possible.

$5.$ Intercoastal's board of directors has indicated an intention to declare and pay dividends of $$75,000$ on the last day of each quarter.

$6.$ The interest on any short$-$term borrowing will be paid when the loan is repaid. Interest on Intercoastal's bonds is paid semiannually on January $31$ and July $31$ for the preceding six$-$month period.

$7.$ Property taxes are paid semiannually on February $28$ and August $31$ for the preceding six$-$month period.

Required:

Prepare Intercoastal Electronics Company's master budget for the first quarter of $201$ by completing the following schedules and statements.

$5.$ Complete the first three lines of the summary cash budget. Then do the analysis of short$-$term financing needs in requirement $6.$ Then finish requirement $5.$

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