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Giovanni Grimaldi runs a small tax preparation company. Giovanni makes over 80% of his money during the busy February 1-April 15 tax season; he is always concerned that he will not have enough money to pay his bills over the rest of the year. Thus, Giovanni is very careful about budgeting his cash. Giovanni has $5,000 in the company checking account on February 1, 2010. He estimates the following items for the rest of 2010:Cash Collections from Customers, 2/1-4/15 $120,000Cash Collections from Customers, 4/16-12/31 $25,000Operating Expenses Paid, 2/1-12/31 $85,000Interest on Small Business Loan payable on 1/15 and 7/15 $5,000Depreciation on Office Equipment $8,000Professional Malpractice Insurance for 2011, due 12/31/10 $10,000Finally, Giovanni estimates that he needs to withdraw $55,000 from the business (as dividends) to cover his own personal living expenses this year. Will Giovanni have enough cash to get through the year? What is his budgeted cash balance on December 31, 2010
Giovanni Grimaldi runs a small tax preparation company. Giovanni makes over 80% of hismoney during the busy February 1-April 15 tax season; he is always concerned that he willnot have enough…
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