Prince Charles Island Company has expected sales of $6,000 in September, $10,000 in October, $16,000 in November, and $12,000 in December. Cash sales are 20 percent and credit sales are 80 percent of total sales. Historically, 40 percent of receivables are collected in the month after the sale, and the remaining 60 percent collected two months after Assume that the company's cash payments for November are $13,000, and December $6,000. The beginning cash balance in November is $5,000, which is the desired minimum balance. a. Prepare a cash receipts schedule for November and December. Sales Credit sales Cash sales Collections in the month after credit sales Collections two months after credit sales Total cash receipts Cash receipts Cash payments Net cash flow Prince Charles Island Company Cash Receipts Schedule September Prince Charles Island Company Cash Budget November Beginning cash balance Cumulative cash balance i Monthly loan or (repayment) Cumulative loan balance Ending cash balance S b. Prepare a cash budget with borrowing needed or repayments for November and December. (Do not leave any empty spaces; input a O wherever it is required. Amount to be deducted should be indicated with minus sign.) December $ October $ November $ December
Prince Charles Island Company has expected sales of $6,000 in September, $10,000 in October, $16,000 in November, and $12,000 in December. Cash sales are 20 percent and credit sales are 80 percent of total sales. Historically, 40 percent of receivables are collected in the month after the sale, and the remaining 60 percent collected two months after Assume that the company's cash payments for November are $13,000, and December $6,000. The beginning cash balance in November is $5,000, which is the desired minimum balance. a. Prepare a cash receipts schedule for November and December. Sales Credit sales Cash sales Collections in the month after credit sales Collections two months after credit sales Total cash receipts Cash receipts Cash payments Net cash flow Prince Charles Island Company Cash Receipts Schedule September Prince Charles Island Company Cash Budget November Beginning cash balance Cumulative cash balance i Monthly loan or (repayment) Cumulative loan balance Ending cash balance S b. Prepare a cash budget with borrowing needed or repayments for November and December. (Do not leave any empty spaces; input a O wherever it is required. Amount to be deducted should be indicated with minus sign.) December $ October $ November $ December
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Prince Charles Island Company has expected sales of $6,000 in September, $10,000 in October, $16,000 in November, and $12,000 in
December. Cash sales are 20 percent and credit sales are 80 percent of total sales. Historically, 40 percent of receivables are
collected in the month after the sale, and the remaining 60 percent collected two months after.
Assume that the company's cash payments for November are $13,000, and December $6,000. The beginning cash balance in
November is $5,000, which is the desired minimum balance.
a. Prepare a cash receipts schedule for November and December.
Sales
Credit sales
Cash sales
Collections in the month after credit sales
Collections two months after credit sales
Total cash receipts
Prince Charles Island Company
Cash Receipts Schedule
September
S
Cash receipts
Cash payments
Net cash flow
Prince Charles Island Company
Cash Budget
November
Beginning cash balance
Cumulative cash balance.
Monthly loan or (repayment).
Cumulative loan balance.
Ending cash balance i
$
October
December
S
$
b. Prepare a cash budget with borrowing needed or repayments for November and December. (Do not leave any empty spaces; input
a O wherever it is required. Amount to be deducted should be indicated with minus sign.)
November
$
$
December
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