20.10

During the last week of August, OneIda Company's owner approaches the bank for a $107,500 loan to be made on September 2 and repald on November 30 with annual Interest of 14%, for an Interest cost of $3,763. The owner plans to Increase the store's Inventory by $60,000 during September and needs the loan to pay for Inventory acquisitions. The bank's loan officer needs more Information about Oneida's ability to repay the loan and asks the owner to forecast the store's November 30 cash position. On September 1 , OneIda Is expected to have a $4,000 cash balance, $115,500 of net accounts recelvable, and $100,000 of accounts payable. Its budgeted sales, merchandise purchases, and varlous cash payments for the next three months follow. *Operations began In August; August sales were $150,000 and purchases were $100,000. The budgeted September merchandise purchases Include the Inventory Increase. All sales are on account. The company predicts that 23% of credit sales is collected in the month of the sale, 47% in the month following the sale, 19% in the second month, 7% In the third, and the remainder is uncollectible. Applying these percents to the August credit sales, for example, shows that $70,500 of the $150,000 will be collected in September, $28,500 in October, and $10,500 in November. All merchandise Is purchased on credit; 80% of the balance Is pald In the month following a purchase, and the remaining 20% Is paid In the second month. For example, of the $100,000 August purchases, $80,000 will be pald In September and $20,000 In October. Prepare the calculation of cash receipts from sales and calculation of cash payments for merchandise. Prepare a cash budget for September, October, and November. (Round your final answers to the nearest whole dollar.)