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fin370 week 3 sharpe - Problem 4-6A(Cash budget The Sharpe...

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Problem: 4-6A ( Cash budget ) The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows: January $ 90,000 February 120,000 March 135,000 April 240,000 May $300,000 June 270,000 July 225,000 August 150,000 Of Sharpe’s sales, 10 percent is for cash, another 60 percent is collected in the month following sale, and 30 percent is collected in the second month following sale. November and December sales for 2003 were $220,000 and $175,000, respectively. Sharpe purchases its raw materials two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchases for April sales are made in February and payment is made in March. In addition, Sharpe pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in March The company’s cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000 must be maintained at all times. Assume that any short-term financing needed to
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