Total assets
$ 460
Total liabilities and owner’s equity
$460
Requirements
1. Prepare a cash budget for the four months ending December 31, 2014, for two alternatives: weaving the place mats in cotton using the existing loom, and weaving the place mats in linen using the new loom. For each alternative, prepare a budgeted income statement for the four months ending December 31,2014, and a budgeted balance sheet at December 31, 2014.
2. On the basis of financial considerations only, what should Magnuson do? Give your reason.
3. What nonfinancial factors might Magnuson consider in her decision?
