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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 $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 three- month period follow: Sales (all on account) Merchandise purchases. Payroll Lease payments Advertising Equipment purchases Depreciation Required 1 Required 2 April $ 242,000 $ 213,000 $ 19,600 $ 29,200 $ 62,600 $ 16,800 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 $174,500. 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 $87,000 loan is made on April 1 and repaid with interest on June 30. May $ 618,000 $ 181,500 $ 19,600 $ 29,200 $ 62,600 $ 16,800 Complete this question by entering your answers in the tabs below. Beginning cash balance Add receipts: Collections from customers June $ 310,000 $ 133,500 $ 24,800 $ 29,200 $ 47,680 $ 112,000 $ 16,800 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. Prime Products Cash Budget April May June Quarter

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 $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 three- month period follow: Sales (all on account) Merchandise purchases. Payroll Lease payments Advertising Equipment purchases Depreciation Required 1 Required 2 April $ 242,000 $ 213,000 $ 19,600 $ 29,200 $ 62,600 $ 16,800 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 $174,500. 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 $87,000 loan is made on April 1 and repaid with interest on June 30. May $ 618,000 $ 181,500 $ 19,600 $ 29,200 $ 62,600 $ 16,800 Complete this question by entering your answers in the tabs below. Beginning cash balance Add receipts: Collections from customers June $ 310,000 $ 133,500 $ 24,800 $ 29,200 $ 47,680 $ 112,000 $ 16,800 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. Prime Products Cash Budget April May June Quarter

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $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 three- month period follow: Sales (all on account) Merchandise purchases Payroll Lease payments Advertising Equipment purchases Depreciation Required 1 Required 2 April $ 242,000 $ 213,000 $ 19,600 $ 29,200 $ 62,600 - Beginning cash balance Add receipts: Collections from customers May $ 618,000 $ 181,500 Total cash available $ 19,600 $ 29, 200 $ 62,600 $ 16,800 $ 16,800 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 $174,500. 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 $87,000 loan is made on April 1 and repaid with interest on June 30. Complete this question by entering your answers in the tabs below. June $ 310,000 $ 133,500 $ 24,800 $ 29,200 $ 47,680 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. $ 112,000 $ 16,800 Prime Products Cash Budget April 0 May 0 June 0 Quarter 0
Transcribed Image Text: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 $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 three- month period follow: Sales (all on account) Merchandise purchases Payroll Lease payments Advertising Equipment purchases Depreciation Required 1 Required 2 April $ 242,000 $ 213,000 $ 19,600 $ 29,200 $ 62,600 - Beginning cash balance Add receipts: Collections from customers May $ 618,000 $ 181,500 Total cash available $ 19,600 $ 29, 200 $ 62,600 $ 16,800 $ 16,800 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 $174,500. 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 $87,000 loan is made on April 1 and repaid with interest on June 30. Complete this question by entering your answers in the tabs below. June $ 310,000 $ 133,500 $ 24,800 $ 29,200 $ 47,680 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. $ 112,000 $ 16,800 Prime Products Cash Budget April 0 May 0 June 0 Quarter 0
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