Prime Products hopes to borrow $87,000 on April 1 and repay it plus interest of $1,220 following data are available for the months April through June, during which the loan April 1, the start of the loan period, the cash balance will be $39,000. Accounts receiv total $170, 800, of which 30 $146,400 will be collected during April and $19, 520 will b ng May. The remainder will be uncollectible. b. The company estimates 30% of a mon ected in the month of sale, 60% in the month following sale, and 8% in the second mor
Prime Products hopes to borrow $87,000 on April 1 and repay it plus interest of $1,220 following data are available for the months April through June, during which the loan April 1, the start of the loan period, the cash balance will be $39,000. Accounts receiv total $170, 800, of which 30 $146,400 will be collected during April and $19, 520 will b ng May. The remainder will be uncollectible. b. The company estimates 30% of a mon ected in the month of sale, 60% in the month following sale, and 8% in the second mor
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![10 Prime Products hopes to borrow $87,000 on April 1 and repay it plus interest of $1,220 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 $39,000. Accounts receivable on April 1
will total $170, 800, of which 30 $146,400 will be collected during April and $19, 520 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 threemonth
period follow: \table[[, April, May, June], [Sales (all on account), $242,000, $618,000, $310,000
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare a cash budget, by month and in total, for the three-month period. Assume the $87,000 loan is made on April 1 and
repaid with interest on June 30.
Note: Cash deficiency, repayments and interest should be indicated by a minus sign.
Beginning cash balance
Add receipts:
Collections from customers
Total cash available
Less cash disbursements:
Merchandise purchases
Payroll
Lease payments
Advertising
Equipment purchases
Total cash disbursements
Excess (deficiency) of cash available over
disbursements
Financing:
Borrowings
Repayments
Interest
Total financing
Ending cash balance
Prime Products
Cash Budget
$
3
$
April
39,000 $
219,000
258,000
< Required 1
174,500✔ 213,000
19,600
19,600
29,200✔
62,600✔
0
285,900
(27,900)
0000
87,000✔
0
0
87,000
59,100
May
59,100 $
$
350,120✔
409,220
29,200✔
62,600✔
0
324,400
84,820
0
0
0
84,820
$
Required 2 >
June
84,820
483,160
567,980
181,500(
24,800✔
29,200✔
62,600 X
112,000
410,100
157,880
0
(1,220) X
(87,000) X
(88,220)
Quarter
S 39,000✔
69,660 $
1,052,280✔
1,091,280
569,000
64,000✔
87,600✔
172,800 X
112,000✔
1,005,400
85,880
87,000✔
(1,220) X
(87,000) X
(1,220)
84,660](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff145781f-4e77-485d-a703-185aa783df6e%2F774b39ca-58c6-48ac-91de-73a223b8a5ee%2Fymicau_processed.png&w=3840&q=75)
Transcribed Image Text:10 Prime Products hopes to borrow $87,000 on April 1 and repay it plus interest of $1,220 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 $39,000. Accounts receivable on April 1
will total $170, 800, of which 30 $146,400 will be collected during April and $19, 520 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 threemonth
period follow: \table[[, April, May, June], [Sales (all on account), $242,000, $618,000, $310,000
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare a cash budget, by month and in total, for the three-month period. Assume the $87,000 loan is made on April 1 and
repaid with interest on June 30.
Note: Cash deficiency, repayments and interest should be indicated by a minus sign.
Beginning cash balance
Add receipts:
Collections from customers
Total cash available
Less cash disbursements:
Merchandise purchases
Payroll
Lease payments
Advertising
Equipment purchases
Total cash disbursements
Excess (deficiency) of cash available over
disbursements
Financing:
Borrowings
Repayments
Interest
Total financing
Ending cash balance
Prime Products
Cash Budget
$
3
$
April
39,000 $
219,000
258,000
< Required 1
174,500✔ 213,000
19,600
19,600
29,200✔
62,600✔
0
285,900
(27,900)
0000
87,000✔
0
0
87,000
59,100
May
59,100 $
$
350,120✔
409,220
29,200✔
62,600✔
0
324,400
84,820
0
0
0
84,820
$
Required 2 >
June
84,820
483,160
567,980
181,500(
24,800✔
29,200✔
62,600 X
112,000
410,100
157,880
0
(1,220) X
(87,000) X
(88,220)
Quarter
S 39,000✔
69,660 $
1,052,280✔
1,091,280
569,000
64,000✔
87,600✔
172,800 X
112,000✔
1,005,400
85,880
87,000✔
(1,220) X
(87,000) X
(1,220)
84,660
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