1 Schedule of Expected Cash Collections From accounts receive $120.000 From April $300.000 VOL000 60% - $300.000 88 - $300,000 From Moy solos From June salos 3210.000 Total cash collections 2. Cash Budget . April June ACCT 230 Darla Kay Karnes - Chapter 7 Homework Meaning oth Dance 324.000 Conections from customers 210.000 4 Totalcosh available Les con abunements Merchandise purchases Payroll 140.000 20.000 Lease payments Advertising 22.000 DO 80,000 Equipment purchases Total cash disbursements 242.000 18.000) 30.000 30.000 Excess deficiency) of cash Financing: Borrowings Repayments Interesi Total financing Ending cash balance -30.000 11.2001 131.200) -30,000 11.2003 1200) 30.000 $ 22.000 ACCT 230 Darla Kay Karnes - Chapter 7 Homework (CMA, adapted) PROBLEM 7-21A Schedule of Expected Cash Collections, Cash Budget [LO7-2, LO7-8] 5.10.000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because The president of the retailer Prime Products has just approached the company's bank with a request for a the company has had some difficulty in paying or 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 available for the months April through June, during which the loan will be used: On April 1. the start of the loan period, the cash balance will be $24,000. Accounts receivable on past experience sbale, sandales in the second his sales are collected in the month of sale. 6 ., alebes month following sade and sofecin dhe second month following sale. The other 2% represents bad debts that are never collected. Budgeted sales and expenses for the three-month period follow: collected during May. The remainder will be uncollectible, Sales (all on account) Merchandise purchases Payroll Lease payments Advertising Equipment purchases Depreciation April $300,000 $210,000 $20,000 $22.000 $60,000 May June $400,000 $250,000 $160,000 $130,000 $20,000 $18,000 $22,000 $22,000 $60,000 $50,000 $65,000 $15,000 $15.000 $15,000 c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid during April, total $140,000. dIn preparing the cash budget, assume that the $30,000 loan will be made in April and repaid in June. Interest on the loan will total $1,200. Chapter 7 Required: 1. Prepare a schedule of 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. 3. If the company needs a minimum cash balance of $20,000 to start each month, can the loan be repaid as planned? Explain. PROBLEM 7-22A Cash Budget with Supporting Schedules [LO7-2, LO7-4, LO7-8] Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter The company usually has to borrow money during this quarter to support peak sales of lawn care equip ment, which occur during May. The following information has been assembled to assist in preparing a cash udget for the quarter: Budgeted monthly absorption costing income statements for April-July are