es Prime Products hopes to borrow $55,000 on April 1 and repay it plus interest of $900 on June 30. The following data are available for the months April through June, during which the loan will be used: a. On April 1, the start of the loan period, the cash balance will be $26,000. Accounts receivable on April 1 will total $156,800, of which $134,400 will be collected during April and $17,920 will be collected during May. The remainder will be uncollectible. b. The company estimates 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% are bad debts that are never collected. Budgeted sales and expenses for the three- month period follow: Sales (all on account) April $ 375,000 May $ 412,000 June $ 336,000 Merchandise purchases Payroll $ 238,000 $ 155,000 $ 172,000 $ 18,800 $ 18,800 $ 22,500 Lease payments $ 24,400 $ 24,400 $ 24,400 Advertising $ 74,800 $ 74,800 $ 50,420 Equipment purchases Depreciation $ 17,000 $ 17,000 $ 106,500 $ 17,000 c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $166,500. Required: 1. Calculate the expected cash collections for April, May, and June, and for the three months in total. 2. Prepare a cash budget, by month and in total, for the three-month period. Assume the $55,000 loan is made on April 1 and repaid with interest on June 30. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the expected cash collections for April, May, and June, and for the three months in total.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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answer must be in table format or i will give down vote 

es
Prime Products hopes to borrow $55,000 on April 1 and repay it plus interest of $900 on June 30. The following data are available for
the months April through June, during which the loan will be used:
a. On April 1, the start of the loan period, the cash balance will be $26,000. Accounts receivable on April 1 will total $156,800, of which
$134,400 will be collected during April and $17,920 will be collected during May. The remainder will be uncollectible.
b. The company estimates 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 8% in the
second month following sale. The other 2% are bad debts that are never collected. Budgeted sales and expenses for the three-
month period follow:
Sales (all on account)
April
$ 375,000
May
$ 412,000
June
$ 336,000
Merchandise purchases
Payroll
$ 238,000 $ 155,000
$ 172,000
$ 18,800
$ 18,800
$ 22,500
Lease payments
$ 24,400
$ 24,400
$ 24,400
Advertising
$ 74,800
$ 74,800
$ 50,420
Equipment purchases
Depreciation
$ 17,000
$ 17,000
$ 106,500
$ 17,000
c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during
March, which will be paid in April, total $166,500.
Required:
1. Calculate the expected cash collections for April, May, and June, and for the three months in total.
2. Prepare a cash budget, by month and in total, for the three-month period. Assume the $55,000 loan is made on April 1 and repaid
with interest on June 30.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Calculate the expected cash collections for April, May, and June, and for the three months in total.
Transcribed Image Text:es Prime Products hopes to borrow $55,000 on April 1 and repay it plus interest of $900 on June 30. The following data are available for the months April through June, during which the loan will be used: a. On April 1, the start of the loan period, the cash balance will be $26,000. Accounts receivable on April 1 will total $156,800, of which $134,400 will be collected during April and $17,920 will be collected during May. The remainder will be uncollectible. b. The company estimates 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% are bad debts that are never collected. Budgeted sales and expenses for the three- month period follow: Sales (all on account) April $ 375,000 May $ 412,000 June $ 336,000 Merchandise purchases Payroll $ 238,000 $ 155,000 $ 172,000 $ 18,800 $ 18,800 $ 22,500 Lease payments $ 24,400 $ 24,400 $ 24,400 Advertising $ 74,800 $ 74,800 $ 50,420 Equipment purchases Depreciation $ 17,000 $ 17,000 $ 106,500 $ 17,000 c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $166,500. Required: 1. Calculate the expected cash collections for April, May, and June, and for the three months in total. 2. Prepare a cash budget, by month and in total, for the three-month period. Assume the $55,000 loan is made on April 1 and repaid with interest on June 30. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the expected cash collections for April, May, and June, and for the three months in total.
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