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. Following Quarter in Coming Year Year First First Second Third Fourth Quarter Sales forecast $420 $342 $346 $394 $394 Paymore's labor and administrative expenses are $75 per quarter and interest on long-term debt is $50 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 $346 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 $346. 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. (Leave no cells blank. Enter 'O' 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.)
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. Following Quarter in Coming Year Year First First Second Third Fourth Quarter Sales forecast $420 $342 $346 $394 $394 Paymore's labor and administrative expenses are $75 per quarter and interest on long-term debt is $50 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 $346 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 $346. 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. (Leave no cells blank. Enter 'O' 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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.
Following
Quarter in Coming Year
Year
First
First
Second
Third
Fourth
Quarter
Sales forecast
$420
$342
$346
$394
$394
Paymore's labor and administrative expenses are $75 per quarter and interest on long-term debt is $50 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
$346 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 $346. 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. (Leave no cells blank. Enter 'O' 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.)
Quarter
(figures in $ millions)
First
Second
Third
Fourth
A. Cash requirements
Cash required for operations
$
40.00
$
30.00
$
30.00
$
30.00
Interest on bank loan
Total cash required
$
40.00
$
30.00
$
30.00
$
30.00
B. Cash raised in quarter
Line of credit
Total cash raised
$
0.00 $
0.00
$
0.00
$
0.00
C. Repayments of bank loan
D. Addition to cash balances
E. Line of credit
Beginning of quarter
End of quarter
$
0.00
$
0.00
$
0.00
$
0.00
24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8ea32dba-6d6d-4916-888d-50b846c7bb15%2F645e120e-01ce-467e-9422-2669a2e3bbcf%2Fbtyvlc_processed.png&w=3840&q=75)
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.
Following
Quarter in Coming Year
Year
First
First
Second
Third
Fourth
Quarter
Sales forecast
$420
$342
$346
$394
$394
Paymore's labor and administrative expenses are $75 per quarter and interest on long-term debt is $50 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
$346 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 $346. 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. (Leave no cells blank. Enter 'O' 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.)
Quarter
(figures in $ millions)
First
Second
Third
Fourth
A. Cash requirements
Cash required for operations
$
40.00
$
30.00
$
30.00
$
30.00
Interest on bank loan
Total cash required
$
40.00
$
30.00
$
30.00
$
30.00
B. Cash raised in quarter
Line of credit
Total cash raised
$
0.00 $
0.00
$
0.00
$
0.00
C. Repayments of bank loan
D. Addition to cash balances
E. Line of credit
Beginning of quarter
End of quarter
$
0.00
$
0.00
$
0.00
$
0.00
24
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education