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29 . The Amber Magic Shoppe has forecast its sales revenues and purchases for the last 5 months of 20X9 to be as follows: Sales

29. The Amber Magic Shoppe has forecast its sales revenues and purchases for the last 5 months of 20X9 to be as follows:

Sales

Purchases

August

$25,000

$17,000

September

15,000

19,5000

October

25,000

29,000

November

30,000

20,000

December

26,000

24,000

30. Follies Bookstore, the only bookstore close to campus, had net income in 20X5 of $90,000. Here are some of the financial ratios from the annual report.

Profit Margin

12%

Return on Investment

20%

Debt to Asset Ratio

55%

Using these ratios, calculate the following for Follies Bookstore: A) Sales B) Total assets C) Total asset turnover D) Total debt E) Shareholders' equity F) Return on equity

65% of sales are on credit. On the basis of past experience, 50% of the accounts receivable are collected the month after the sale and the remainder are collected 2 months after the sale. Purchases are paid 30 days after they are incurred. The firm had a cash balance of $5,000 as of September 30th, and its minimum required cash balance is $4,000. It had no beginning loan balance. Prepare a cash budget for October, November and December.


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