Cash budget and pro forma balance sheet inputs: Jane McDonald, a financial analyst for Carroll Company, has prepared the following sales and cash disbursement estimates for the period February June of the current year. Month Sales Cash disbursements February March $500 $400 600 300 400 600 200 500 200 200 McDonald notes that, historically, 30% of sales have been for cash. Of credit sales, the firm collects 70% 1 month after the sale, and it collects the remaining 30 % 2 months after the sale. The firm wishes to maintain a minimum ending balance in its cash account of $25. The firm will invest balances above this amount 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 cash budgets 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? c. A pro forma balance sheet dated at the end of June is to be prepared from the April May June information presented. Give the size of each of the following: cash, notes payable, marketable securities, and accounts receivable.
Cash budget and pro forma balance sheet inputs: Jane McDonald, a financial analyst for Carroll Company, has prepared the following sales and cash disbursement estimates for the period February June of the current year. Month Sales Cash disbursements February March $500 $400 600 300 400 600 200 500 200 200 McDonald notes that, historically, 30% of sales have been for cash. Of credit sales, the firm collects 70% 1 month after the sale, and it collects the remaining 30 % 2 months after the sale. The firm wishes to maintain a minimum ending balance in its cash account of $25. The firm will invest balances above this amount 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 cash budgets 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? c. A pro forma balance sheet dated at the end of June is to be prepared from the April May June information presented. Give the size of each of the following: cash, notes payable, marketable securities, and accounts receivable.
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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I want to solve these questions: Cash budget and pro forma balance sheet inputs: Jane McDonald, a financial analyst for Carroll Company, has prepared the following sales and cash disbursement estimates for the period February-June of the current year. Month Sales Cash disbursements February $500 $400 March $600 $300 April $400 $600 May $200 $500 June $200 $200 McDonald's notes that, historically, 30% of sales have been for cash. Of credit sales, the firm collects 70% 1 month after the sale, and it collects the remaining 30% 2 months after the sale. The firm wishes to maintain a minimum ending balance in its cash account of 525. The firm will invest balances above this amount 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 S115. a. Prepare cash budgets 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? c. A pro forma balance sheet dated at the end of June is to be prepared from the information presented. Give the size of each of the following: cash, notes payable, marketable securities, and accounts reccivable.
Transcribed Image Text:Cash budget and pro forma balance sheet inputs: Jane McDonald, a financial analyst for Carroll
Company, has prepared the following sales and cash disbursement
estimates for the period February June of the current year.
Month
Sales
Cash disbursements
February
March
$500
$400
600
300
400
600
200
500
200
200
McDonald notes that, historically, 30% of sales have been for cash. Of credit sales, the
firm collects 70% 1 month after the sale, and it collects the remaining 30 % 2 months
after the sale. The firm wishes to maintain a minimum ending balance in its cash account
of $25. The firm will invest balances above this amount 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 cash budgets 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?
c. A pro forma balance sheet dated at the end of June is to be prepared from the
April
May
June
information presented. Give the size of each of the following: cash, notes payable, marketable securities,
and accounts receivable.
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