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c. Prepare a complete monthly cash budget with borrowing and repayments for June through September. The maximum desired cash balance is $50,500. Excess cash (above $50,500) is used to buy marketable securities. Marketable securities are sold before borrowing funds in case of a cash shortfall (less than $10,500). (Negative amounts should be indicated by a minus sign. Assume the June beginning loan balance and beginning marketable security balance is $0.) Archer Electronics Cash Budget June July August September

c. Prepare a complete monthly cash budget with borrowing and repayments for June through September. The maximum desired cash balance is $50,500. Excess cash (above $50,500) is used to buy marketable securities. Marketable securities are sold before borrowing funds in case of a cash shortfall (less than $10,500). (Negative amounts should be indicated by a minus sign. Assume the June beginning loan balance and beginning marketable security balance is $0.) Archer Electronics Cash Budget June July August September

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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c. Prepare a complete monthly cash budget with borrowing and repayments for June through September. The maximum desired cash balance is $50,500. Excess cash (above $50,500) is used to buy marketable securities. Marketable securities are sold before borrowing funds in case of a cash shortfall (less than $10,500). (Negative amounts should be indicated by a minus sign. Assume the June beginning loan balance and beginning marketable security balance is $0.) Archer Electronics Cash Budget Total cash receipts Total cash payments Net cash flow Beginning cash balance. Cumulative cash balance Borrow Repay loan Sell marketable securities Buy marketable securities Ending cash balance Cumulative loan balance Cumulative marketable securities June $0 $0 $0 July $0 $0 $0 August $0 $0 $0 September $0 $0 $0
Transcribed Image Text:c. Prepare a complete monthly cash budget with borrowing and repayments for June through September. The maximum desired cash balance is $50,500. Excess cash (above $50,500) is used to buy marketable securities. Marketable securities are sold before borrowing funds in case of a cash shortfall (less than $10,500). (Negative amounts should be indicated by a minus sign. Assume the June beginning loan balance and beginning marketable security balance is $0.) Archer Electronics Cash Budget Total cash receipts Total cash payments Net cash flow Beginning cash balance. Cumulative cash balance Borrow Repay loan Sell marketable securities Buy marketable securities Ending cash balance Cumulative loan balance Cumulative marketable securities June $0 $0 $0 July $0 $0 $0 August $0 $0 $0 September $0 $0 $0
Archer Electronics Company's actual sales and purchases for April and May are shown here along with forecast sales and purchases for June through September: April (actual) May (actual) June (forecast) July (forecast) August (forecast) September (forecast) Archer Electronics Cash Payments. Schedule Sales Credit sales ash sales One month after sale Two months after sale Total cash receipts Archer Electronics The company makes 20 percent of its sales for cash and 80 percent on credit. Of the credit sales, 50 percent are collected in the month after the sale and 50 percent are collected two months later. Archer pays for 20 percent of its purchases in the month after purchase and 80 percent two months after. Cash Payments Schedule Labor expense equals 15 percent of the current month's sales. Overhead expense equals $12,500 per month. Interest payments of $32,500 are due in June and September. A cash dividend of $52,500 is scheduled to be paid in June. Tax payments of $25,500 are due in June and September. There is a scheduled capital outlay of $350,000 in September. Archer Electronics' ending cash balance in May is $22,500. The minimum desired cash balance is $10,500. Materials. purchases a. Prepare a schedule of monthly cash receipts for June through September. Materials: One month after purchase Sales $370,000 $155,000 Materials: Two months after purchase Labor expense 350,000 April 325,000 Overhead expense Interest payments Dividend payments Tax payments Capital outlay Total payments 325,000 340,000 380,000 Purchases 145,000 145,000 May April 205,000 225,000 b. Prepare a schedule of monthly cash payments for June through September. 220,000 June May $0 June July $0 $0 August September July $0 $0 $0 August September $0 $0
Transcribed Image Text:Archer Electronics Company's actual sales and purchases for April and May are shown here along with forecast sales and purchases for June through September: April (actual) May (actual) June (forecast) July (forecast) August (forecast) September (forecast) Archer Electronics Cash Payments. Schedule Sales Credit sales ash sales One month after sale Two months after sale Total cash receipts Archer Electronics The company makes 20 percent of its sales for cash and 80 percent on credit. Of the credit sales, 50 percent are collected in the month after the sale and 50 percent are collected two months later. Archer pays for 20 percent of its purchases in the month after purchase and 80 percent two months after. Cash Payments Schedule Labor expense equals 15 percent of the current month's sales. Overhead expense equals $12,500 per month. Interest payments of $32,500 are due in June and September. A cash dividend of $52,500 is scheduled to be paid in June. Tax payments of $25,500 are due in June and September. There is a scheduled capital outlay of $350,000 in September. Archer Electronics' ending cash balance in May is $22,500. The minimum desired cash balance is $10,500. Materials. purchases a. Prepare a schedule of monthly cash receipts for June through September. Materials: One month after purchase Sales $370,000 $155,000 Materials: Two months after purchase Labor expense 350,000 April 325,000 Overhead expense Interest payments Dividend payments Tax payments Capital outlay Total payments 325,000 340,000 380,000 Purchases 145,000 145,000 May April 205,000 225,000 b. Prepare a schedule of monthly cash payments for June through September. 220,000 June May $0 June July $0 $0 August September July $0 $0 $0 August September $0 $0
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