Short Answer Question 1:

Develop a cash budget for the next month using the information provided below. Comment on whether your firm will make additions to the short-term investment portfolio or be required to seek funds from a line of credit.

• The sales forecasts for the next month is $210,000
• The current months sales were $140,000
• 80% of sales are collected in the month of sale, with the remainder collected in the following month
• Cost of goods sold equal 70% of sales and the firm has a monthly lease payment of $75,000
• The cash position at the end of the current month is $70,000
• The target cash balance is $40,000