The president of the retaller Prime Products has Just approached the company's bank with a request for a $93,000, 90-day loan. The purpose of the loan Is to asslst the company In acquiring Inventorles. Because the company has had some difficulty In paying off Its loans In the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are avallable for the months April through June, during whlch the loan will be used: a. On April 1, the start of the loan perlod, the cash balance will be $36,000. Accounts recelvable on April 1 will total $179,200, of which $153.600 wll be collected durling April and $20,480 will be collected during May. The remalnder wll be uncollectible. b. Past experlence shows that 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% Is bad debts that are never collected. Budgeted sales and expenses for the three- month perlod follow: April May Sales (all on account) Merchandise purchases Payroll Lease payments Advertising Equipment purchases Depreciation June $ 232,000 $ 476,000 $ 296,000 $ 135,500 $ 22,800 $ 22,800 $ 26,900 $ 31,400 $ 31,400 $ 31,400 $ 63,600 $ 63,600 $ 41,680 $ 102,000 $17,800 $ 17,800 $ 17,800 $ 188,000 $ 163,500 c. Merchandise purchases are pald In full during the month following purchase. Accounts payable for merchandise purchases during March, which will be pald in April, total $162,500. d. In preparing the cash budget, assume that the $93,000 loan will be made In April and repald In June. Interest on the loan wll total $1,280. 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 perlod.
The president of the retaller Prime Products has Just approached the company's bank with a request for a $93,000, 90-day loan. The purpose of the loan Is to asslst the company In acquiring Inventorles. Because the company has had some difficulty In paying off Its loans In the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are avallable for the months April through June, during whlch the loan will be used: a. On April 1, the start of the loan perlod, the cash balance will be $36,000. Accounts recelvable on April 1 will total $179,200, of which $153.600 wll be collected durling April and $20,480 will be collected during May. The remalnder wll be uncollectible. b. Past experlence shows that 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% Is bad debts that are never collected. Budgeted sales and expenses for the three- month perlod follow: April May Sales (all on account) Merchandise purchases Payroll Lease payments Advertising Equipment purchases Depreciation June $ 232,000 $ 476,000 $ 296,000 $ 135,500 $ 22,800 $ 22,800 $ 26,900 $ 31,400 $ 31,400 $ 31,400 $ 63,600 $ 63,600 $ 41,680 $ 102,000 $17,800 $ 17,800 $ 17,800 $ 188,000 $ 163,500 c. Merchandise purchases are pald In full during the month following purchase. Accounts payable for merchandise purchases during March, which will be pald in April, total $162,500. d. In preparing the cash budget, assume that the $93,000 loan will be made In April and repald In June. Interest on the loan wll total $1,280. 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 perlod.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Please help with question 1 and 2. Both the images are of the same continuing question
Transcribed Image Text:The president of the retaller Prime Products has Just approached the company's bank with a request for a $93,000, 90-day loan. The
purpose of the loan Is to asslst the company In acquiring Inventorles. Because the company has had some difficulty in paying off Its
loans In the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data
are avallable for the months April through June, durtng whlch the loan will be used:
a. On April 1, the start of the loan perlod, the cash balance will be $36,000. Accounts recelvable on April1 will total $179.200, of which
$153,600 will be collected durlng April and $20.480 will be collected during May. The remalnder will be uncollectible.
b. Past experlence shows that 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% Is bad debts that are never collected. Budgeted sales and expenses for the three-
month perlod follow:
April
May
Sales (all on account)
Merchandise purchases
Payroll
Lease payments
Advertising
Equipment purchases
Depreciation
June
$ 232,000 $ 476,000 $ 296,000
$ 188,000 $ 163,500 $ 135,500
26,900
$ 31,400
$ 41.680
$ 102,000
$ 17,800
$ 22,800 $ 22,800
$ 31,400 $ 31,400
$ 63,600 $ 63,600
$ 17,800
$ 17,800
c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during
March, which will be pald in April, total $162,500.
d. In preparing the cash budget, assume that the $93,000 loan will be made In April and repald in June. Interest on the loan will total
$1.280.
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 perlod.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Calculate the expected cash collections for April, May, and June, and for the three months in total.
Schedule of Expected Cash Collections
April
May
June
Quarter
Total cash collections
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Transcribed Image Text: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 perlod.
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. (Cash deficiency, repayments and interest should be
indicated by a minus sign.)
Prime Products
Cash Budget
April
May
June
Quarter
Beginning cash balance
Add receipts:
Collections from customers
Total cash available
Less cash disbursements:
Merchandise purchases
Рayrol
Lease payments
Advertising
Equipment purchases
Total cash disbursements
Excess (deficiency) of cash available over disbursements
Financing:
Borrowings
Repayments
Interest
0.
Total financing
Ending cash balance
< Prev
2 of 5
Next >
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