2A bank offers your firm a revolving creditarrangement for up to $64 million at aninterest rate of 1.60% per quarter. The bankalso requires you to maintain a compensatingbalance of 3% against the unused portion ofthe credit line, to be deposited in a non-interest-bearing account. Assume you have ashort-term investment account at the bankSkippedthat pays .95% per quarter, and assume thatthe bank uses compound interest on itsrevolving credit loans. (Do not roundintermediate calculations. Round the finalanswers to 2 decimal places.)a. What is your effective annual interest rate(an opportunity cost) on the revolving creditarrangement if your firm does not use itduring the year?Effective annual interest rate%b. What is your effective annual interest rateon the lending arrangement if you borrow $32million immediately and repay it in one year?Effective annual interest ratec. What is your effective annual interest rate ifyou borrow $64 million immediately andrepay it in one year?Effective annual interest rate% 1The following is the sales budget forYellowhead Inc. for the first quarter of 2018:MarchJanuary$216,000February$236,000Sales$259,000SkippedCredit sales are collected as follows: 65% inthe month of the sale, 30% in the month afterthe sale, and 5% in the second month afterthe sale.The accounts receivable balance at the end ofthe previous quarter was $100,000 ($70,000of which was uncollected December sales).a. Calculate the sales for November. (Omit $sign in your response.)November salesb. Calculate the sales for December. (Roundthe final answer to 2 decimal places. Omit $sign in your response.)December salesc. Calculate the cash collections from sales foreach month from January through March. (Donot round intermediate calculations. Roundthe final answers to 2 decimal places. Omit$ sign in your response.)

Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

The following is the sales budget for Yellowhead Inc. for the first quarter of 2018: March January $216,000 February $236,000 Sales $259,000 Credit sales are collected as follows: 65% in the month of the sale, 30% in the month after the sale, and 5% in the second month after the sale. The accounts receivable balance at the end of the previous quarter was $100,000 ($70,000 of which was uncollected December sales). a. Calculate the sales for November. (Omit $ sign in your response.) November sales $ b. Calculate the sales for December. (Round the final answer to 2 decimal places. Omit $ sign in your response.) December sales c. Calculate the cash collections from sales for each month from January through March. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)

The following is the sales budget for Yellowhead Inc. for the first quarter of 2018: March January $216,000 February $236,000 Sales $259,000 Credit sales are collected as follows: 65% in the month of the sale, 30% in the month after the sale, and 5% in the second month after the sale. The accounts receivable balance at the end of the previous quarter was $100,000 ($70,000 of which was uncollected December sales). a. Calculate the sales for November. (Omit $ sign in your response.) November sales $ b. Calculate the sales for December. (Round the final answer to 2 decimal places. Omit $ sign in your response.) December sales c. Calculate the cash collections from sales for each month from January through March. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Jasper Company has 61% of its sales on credit and 39% for cash. All credit sales are collected in…

A: Cash receipts are those which are collected by the entity from the sales of previous or current…

Q: Torres Company budgets merchandise purchases of $15,800 in January, $17,600 in February, and $22,200…

A: Cash payment is the amount of the payment expected to be made by the entity for the purchases of the…

Q: Pharoah Company expects to have a cash balance of $64,800 on January 1, 2017. These are the relevant…

A: The cash budget is prepared by the management for future planning on the basis of past experience.…

Q: Cedar Company has forecast purchases to be $338,000 in June, $377,000 in July, $319,000 in August,…

A: A cash budget is a written plan that projects a company's cash flows for specific timeframes, like…

Q: The following information was taken from Vaughn Manufacturing’s cash budget for the month of July:…

A: Cash Budget: A cash budget is an estimate of the cash flows that are expected to be generated by an…

Q: Benton Company's sales budget shows the following expected total sales: Month Sales $18,000 $37,000…

A: In April, collections would be: 67% of credit sales of March 25% of credit sales of April Cash…

Q: Use this information about Nuthatch Corporation to answer the question that follows. Nuthatch…

A: In the case in question, we are given that:30% of every month's sales is cashBalance 70% is credit…

Q: Kent Company has a sales budget for next month of $1,000,000. Cost of goods sold is expected to be…

A: Cost of goods sold is the total cost of units sold during the period. It is calculated as beginning…

Q: Pina Company estimates that sales revenue will be $72000 during July, $62000 for June, and $77200…

A: The objective of the question is to calculate the budgeted collections from customers for the month…

Q: Markham Company has completed its sales budget for the first quarter of Year 2. Projected credit…

A: Accounts receivables is the amount to be collected from the customers which is recorded under…

Q: The following data relate to the operations of Shilow Company, a wholesale distributor of consumer…

A: When trying to look for the formula in Excel, you have to click the cell that you want to see the…

Q: Digregory makes all purchases on account, subject to the following payment pattern: Paid in the…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: Bridgeport Inc. has budgeted sales for the second quarter of $340,000 for April; $505,000 for May;…

A: Cash budget is used in forecasting to determine supplier payment, receipts from customers which in…

Q: UIO Company makes all of its sales on account. UIOcollects its account as follows: 20% in the month…

A: The account receivables are the assets of the business which would be converted into cash within one…

Q: he following is the sales budget for the given months of Hecto, Ltd.: Cash Sales Credit Sales May…

A: The cash budget is prepared by the management to estimate the expected cash receipt and cash…

Q: Audrey Incorporated has forecast sales to be $223,000 in February, $288,000 in March, $308,000 in…

A: Budgeting anticipates revenue and expenditures for a future period based on the past performance and…

Q: The following is the sales budget for Yellowhead Inc. for the first quarter of 2021: Sales January…

A: The problem asking to find the sales for November and December and the corresponding cash…

Q: Hardy Company's cost of goods sold is consistently 70% of sales. The company plans ending…

A: Inventory means the detailed list or stock of items, goods, or materials held by a business or…

Q: remainder the following month. The January cash collections from sales are a. $644,760 Ob.…

A: Budget: A budget is an estimation to determine the income that will be earned and expenses that will…

Q: Spicer & Co has budgeted its credit sales as follows: June $ 600,000 July $ 600,000 August $ 800,000…

A: A cash budget offers a thorough estimate of anticipated cash inflows and outflows over a given time…

Q: The following is the sales budget for Lemonis, Incorporated, for the first quarter of 2021: January…

A: Detailed explanation:Credit Sales are collected as follows :55% on month of sale30% on month after…

Q: The company pays for its purchases within 10 days of purchase, so assume that one-third of the…

A: Information provided:The company pays for purchases within 10 days.Merchandise cost: $10 per…

Q: Camelia, a merchandising company, has provided the following extracts from their budget for the…

A: A company makes sales to its customers on cash basis and credit basis.The sales made on credit basis…

Q: A company requires a minimum $12,400 cash balance at each month-end. If necessary, a loan is taken…

A: Budgeting is a method of estimating expected future outcomes based on past events. Budgeting…

Q: Rivers Company purchases merchandise on account. In general, Rivers pays 50% in the month of…

A: Cash disbursements are used in the cash budget. It indicates the amount to be collected and paid in…

Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

2
A bank offers your firm a revolving credit
arrangement for up to $64 million at an
interest rate of 1.60% per quarter. The bank
also requires you to maintain a compensating
balance of 3% against the unused portion of
the credit line, to be deposited in a non-
interest-bearing account. Assume you have a
short-term investment account at the bank
Skipped
that pays .95% per quarter, and assume that
the bank uses compound interest on its
revolving credit loans. (Do not round
intermediate calculations. Round the final
answers to 2 decimal places.)
a. What is your effective annual interest rate
(an opportunity cost) on the revolving credit
arrangement if your firm does not use it
during the year?
Effective annual interest rate
%
b. What is your effective annual interest rate
on the lending arrangement if you borrow $32
million immediately and repay it in one year?
Effective annual interest rate
c. What is your effective annual interest rate if
you borrow $64 million immediately and
repay it in one year?
Effective annual interest rate
%

1
The following is the sales budget for
Yellowhead Inc. for the first quarter of 2018:
March
January
$216,000
February
$236,000
Sales
$259,000
Skipped
Credit sales are collected as follows: 65% in
the month of the sale, 30% in the month after
the sale, and 5% in the second month after
the sale.
The accounts receivable balance at the end of
the previous quarter was $100,000 ($70,000
of which was uncollected December sales).
a. Calculate the sales for November. (Omit $
sign in your response.)
November sales
b. Calculate the sales for December. (Round
the final answer to 2 decimal places. Omit $
sign in your response.)
December sales
c. Calculate the cash collections from sales for
each month from January through March. (Do
not round intermediate calculations. Round
the final answers to 2 decimal places. Omit
$ sign in your response.)

Expert Solution

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!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

The following is the sales budget for Yellowhead Inc. for the first quarter of 2021: January February $212,000 $232,000 March $255,000 Sales Credit sales are collected as follows: 70% in the month of the sale, 15% In the month after the sale, and 15% in the second month after the sale. The accounts receivable balance at the end of the previous quarter was $96,000 ($66,000 of which was uncollected December sales), a. Calculate the sales for November. (Omit "$" sign in your response.) November sales $ b. Calculate the sales for December. (Round the final answer to 2 decimal places. Omit "$" sign in your response.) $ December sales c. Calculate the cash collections from sales for each month from January through March. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit "$" sign in your response.) January February March Cash collections $ $ $
Miller Corporation has the following sales budget for the third quarter of 2021: Month Sales July $400,000 August $320,000 September $500,000 Historically, the following trend has been established regarding cash collection of sales: 60 percent of sales are paid in month of sale 35 percent of sales are paid in month following the sale 5 percent of sales are uncollectible and are written off in the month following the sale The expected total cash receipts for the month of September is: A. $300,000. B. $25,000. C. $112,000. D. $412,000.
Jasper Company has 62% of its sales on credit and 38% for cash. All credit sales are collected in full in the first month following the sale. The company budgets sales of $522,000 for April, $532,000 for May, and $557,000 for June. Total sales for March are $304,900. Prepare a schedule of cash receipts from sales for April, May, and June. Sales Cash receipts from: Accounts receivable Total cash receipts JASPER COMPANY Schedule of Cash Receipts from Sales April 522,000 May 532,000 June 557,000
Company L charges all operating expenses to credit. They pay 70% of their accounts payable in the month following the expense, and 30% two months following the expense. Expenses (all paid for on credit) for the last three months have been provided below: August: $80,000 September: $120,000 October: $94,000 What is the budgeted cash outflow for October?
Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business September, October, and November are $239,000, $319,000, and $424,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale. The cash collections expected in November from accounts receivable are projected to be: Ca. $338,520 Ob. $282,100 Oc. $237,440 Od. $192,780
A manufacturing company's sales budget indicates the following sales: January: $30,000; February: $20,000; March: $15,000. The company expects 80% of the sales to be on account. Credit sales are collected 30% in the month of the sale and 70% in the month following the sale. The total cash receipts collected during March will be $
Cloudy Company had the following historical collection pattern for its credit sales: 70% collected in the month of sale 12% collected in the first month after month of sale 10% collected in the second month after month of sale 5% collected in the third month after month of sale 3% uncollectible The sales on open account (credit sales) have been budgeted for the last six months of the year as shown below: July August September October November December The estimated cash collection by Cloudy Company during September from credit sales in July, August, and September is: Multiple Choice $83,840. $100,160. $90,880. $ 92,000 $ 104,000 $ 116,000 $ 128,000 $ 140,000 $ 122,000 $64,400.
The Overland Company is preparing its cash budget for the month of June. The following information is available concerning its accounts receivable: $304,000 229,000 Estimated credit sales for June Actual credit sales for May Estimated collections in June for credit sales in June Estimated collections in June for credit sales in May Estimated collections in June for credit sales prior to May 25% 65% $ 22,000 16,000 14,000 Estimated write-offs in June for uncollectible credit sales Estimated provision for bad debts in June for credit sales in June What are the estimated cash receipts from accounts receivable collections in June?
Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business September, October, and November are $245,000, $311,000, and $413,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale. The cash collections expected in November from accounts receivable are projected to be: a. $231,280 O b. $187,740 Oc. $329,784 Od. $274,820
The following data are from the budget of Ritewell Publishers. Half the company's sales are transacted on a cash basis. The other half are paid for with a 1-month delay. The company pays all of its credit purchases with a 1-month delay. Credit purchases in January were $140, and total sales in January were $290. TT February March $ 420 April Total sales $ 440 $ 400 125 135 115 Cash purchases Credit purchases Labor and administrative purchases Taxes, interest, and dividends Capital expenditures 95 85 95 85 85 85 65 65 65 210 Complete the following cash budget. (Leave no cells blank. Enter '0' when necessary. Negative amounts should be indicated by a minus sign.) February March Aprit Sources of cash Collections on current sales Collections on amounts receivable Total sources of cash 0 $ Uses of cash Payments of accounts payable Cash purchases o search
Vaibhav
Markham Company has completed its sales budget for the first quarter of Year 2. Projected credit sales for the first four months of the year are shown below: January February March April $ 20,000 $ 26,000 $ 35,000 $ 38,000 The company's past records show collection of credit sales as follows: 40% in the month of sale and the balance in the following month. The total cash collection from receivables in March is expected to be: Multiple Choice $29,600. $22,100. $31,850. $35,000.