Reproduced below are selected financial data at the end of Year 6 and forecasts for the end of Year 7 for AlMasa Company:

 

Account Year 6 Year 7 (Forecast)
Cash $42,000 ?
Accounts receivable 90,000 ?
Inventory 38,400 $90,000
Fixed assets 120,000 120,000
Accumulated depreciation 25,800 30,000
Accounts payable 78,000 146,400
Notes payable 21,000 18,000
Accrued taxes 10,800 0
Capital stock 120,000 120,000

 

Additional forecast estimates for Year 7:

Sales                                       $495,000

Net Income                           $12,000

Cost of sales                         55% of sales forecast

Days’ sales in receivables 60 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 7.  If AlMasa Company wishes to maintain a minimum cash balance of $60,000, must the company borrow?

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