1.A financial analyst for Carroll Company has prepared the following sales and cash disbursement estimates for the period February-June of the current year. Cash disbursenments Моnth Sales February Ss00 $400 March 600 300 April May 400 600 200 June 200 200 Manager noted that historically, 30% of sales have been for cash. Of credit sales, 70% are collected 1 month after the sale, and the remaining 30% are collected 2 months after the sale. The firm wishes to maintain a minimum ending balance in its cash account of $25. Balances above this amount would be invested in short- term government securities (marketable securities), whereas any deficits would be financed through short-term bank borrowing (notes payable). The beginning cash balance at April 1 is $115. a. Prepare a cash budget for April, May, and June. b. How much financing, if any, at a maximum would Carroll Company require to meet its obligations during this 3-month period?
1.A financial analyst for Carroll Company has prepared the following sales and cash disbursement estimates for the period February-June of the current year. Cash disbursenments Моnth Sales February Ss00 $400 March 600 300 April May 400 600 200 June 200 200 Manager noted that historically, 30% of sales have been for cash. Of credit sales, 70% are collected 1 month after the sale, and the remaining 30% are collected 2 months after the sale. The firm wishes to maintain a minimum ending balance in its cash account of $25. Balances above this amount would be invested in short- term government securities (marketable securities), whereas any deficits would be financed through short-term bank borrowing (notes payable). The beginning cash balance at April 1 is $115. a. Prepare a cash budget for April, May, and June. b. How much financing, if any, at a maximum would Carroll Company require to meet its obligations during this 3-month period?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:1.A financial analyst for Carroll Company has prepared the
following sales and cash disbursement estimates for the period
February-June of the current year.
Cash
disbursements
Month
Sales
February
$500
$400
March
600
300
April
May
400
600
200
500
June
200
200
Manager noted that historically, 30% of sales have been for
cash. Of credit sales,
70% are collected 1 month after the sale, and the remaining 30% are collected
2 months after the sale. The firm wishes to maintain a minimum ending balance in
its cash account of $25. Balances above this amount would be invested in short-
term government securities (marketable securities), whereas any deficits would be
financed through short-term bank borrowing (notes payable). The beginning cash
balance at April 1 is $115.
a. Prepare a cash budget for April, May, and June.
b. How much financing, if any, at a maximum would Carroll Company require to
meet its obligations during this 3-month period?
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