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Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table. First $ 452 (figures in 5 millions) Quarter in Coming Year Second Third $ 354 $ 350 A. Cash requirements Cash required for operations Interest on bank loan Total cash required B. Cash raised in quarter Line of credit Total cash raised C. Repayments of bank loan D. Addition to cash balances E. Line of credit Sales forecast Paymore's labor and administrative expenses are $79 per quarter and interest on long-term debt is $54 per quarter. Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to $350 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $350. On average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter. Prepare a short-term financing plan using the above table. Note: Leave no cells blank. Enter '0' when necessary. Negative amounts should be indicated by a minus sign. Round order, payment, and collection calculations to the nearest whole number. Enter your answers in the Table in millions of dollars, rounded to 2 decimal places. Fourth $ 398 First Second Following Year First Quarter $ 398 Quarter Third Fourth

Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table. First $ 452 (figures in 5 millions) Quarter in Coming Year Second Third $ 354 $ 350 A. Cash requirements Cash required for operations Interest on bank loan Total cash required B. Cash raised in quarter Line of credit Total cash raised C. Repayments of bank loan D. Addition to cash balances E. Line of credit Sales forecast Paymore's labor and administrative expenses are $79 per quarter and interest on long-term debt is $54 per quarter. Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to $350 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $350. On average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter. Prepare a short-term financing plan using the above table. Note: Leave no cells blank. Enter '0' when necessary. Negative amounts should be indicated by a minus sign. Round order, payment, and collection calculations to the nearest whole number. Enter your answers in the Table in millions of dollars, rounded to 2 decimal places. Fourth $ 398 First Second Following Year First Quarter $ 398 Quarter Third Fourth

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Paymore Products places orders for goods equal to 75% of Its sales forecast in the next quarter which has been provided in the below table. Sales forecast First $ 452 (figures in $ millions) A. Cash requirements Cash required for operations Interest on bank loan. Quarter in Coming Year Second Third $ 354 $ 350 Paymore's labor and administrative expenses are $79 per quarter and interest on long-term debt is $54 per quarter. Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to $350 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $350. On average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter. Prepare a short-term financing plan using the above table. Note: Leave no cells blank. Enter '0' when necessary. Negative amounts should be indicated by a minus sign. Round order, payment, and collection calculations to the nearest whole number. Enter your answers in the Table in millions of dollars, rounded to 2 decimal places. Total cash required B. Cash raised in quarter Line of credit Total cash raised C. Repayments of bank loan D. Addition to cash balances E. Line of credit Fourth $398 First Second Following Year First Quarter $398 Quarter Third Fourth
Transcribed Image Text:Paymore Products places orders for goods equal to 75% of Its sales forecast in the next quarter which has been provided in the below table. Sales forecast First $ 452 (figures in $ millions) A. Cash requirements Cash required for operations Interest on bank loan. Quarter in Coming Year Second Third $ 354 $ 350 Paymore's labor and administrative expenses are $79 per quarter and interest on long-term debt is $54 per quarter. Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to $350 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $350. On average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter. Prepare a short-term financing plan using the above table. Note: Leave no cells blank. Enter '0' when necessary. Negative amounts should be indicated by a minus sign. Round order, payment, and collection calculations to the nearest whole number. Enter your answers in the Table in millions of dollars, rounded to 2 decimal places. Total cash required B. Cash raised in quarter Line of credit Total cash raised C. Repayments of bank loan D. Addition to cash balances E. Line of credit Fourth $398 First Second Following Year First Quarter $398 Quarter Third Fourth
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