P23-4A Refer to Problem 23-3A. Before granting a loan to The Book Closet, Westside Bank asks for
Question:
P23-4A Refer to Problem 23-3A. Before granting a loan to The Book Closet, Westside Bank asks for a sensitivity analysis assuming that June sales are only $65.000 rather than the $85.000 originally budgeted. (While cost of goods sold will change, assume that purchases. depreciation, and the other operating expenses will remain the same as in Problem 23-3A.) Required 1. Prepare a revised budgeted balance sheet for The Book Closet, showing separate compu- tations for cash, inventory, and owners' equity balances. 2. Suppose The Book Closet has a minimum desired cash balance of $15,000. Will the com- pany borrow cash in June? 3. How would this sensitivity analysis affect Westside's loan decision?
Step by Step Answer:
Accounting
ISBN: 9780130906991
5th Edition
Authors: Charles T. Horngren, Walter T. Harrison, Linda S. Bamber, Betsy Willis, Becky Jones