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a. On April 1, the start of the loan period, the cash balance will be $41,800. Accounts receivable on April 1 will total $182,000,
a. On April 1, the start of the loan period, the cash balance will be $41,800. Accounts receivable on April 1 will total $182,000, of which $156,000 will be collected during April and $20,800 will be collected during May. The remainder will be uncollectible. b. Past experience 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 period follow: Sales (all on account) Merchandise purchases Payroll Lease payments Advertising Equipment purchases Depreciation April $ 316,000 $ 214,000 May $575,000 $193,000 June $ 264,000 $ 151,500 $ 34, 200 $ 34, 200 $ 27, 300 $ 31,600 $ 31,600 $ 31,600 $ 74,000 $ 74,000 $ 43,000 $ 0 $ 31,000 $ 0 $31,000 $ 70,500 $31,000 c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $175,000. d. In preparing the cash budget, assume that the $73,000 loan will be made in April and repaid in June. Interest on the loan will total $1,080. 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 period. 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 Total cash collections April May June Quarter < Required 1 Required 2 >
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