Answer is

My question is why opening balance of cash of quarter is 74000? And the interest is times 3 month, or times 2 month?

Williams Company sells women's hats for $12 each. Actual and budgeted sales in units for nine months are as follows: January (actual) February (actual) March (actual) April (budget) May (budget) 25,000 June (budget) ... 50,000 26,000 July (budget) ....... 30,000 40,000 August (budget) .......... 28,000 65,000 September (budget) ...... 25,000 100,000 The company should have sufficient inventory on hand at the end of each month to supply 40% of the hats sold in the following month. Suppliers are paid $4.50 each for a hat. One half of a month's purchases are paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit with no discount, and payable within 15 days. The company has found, however, that only 20%of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Monthly operating expenses for the company are given below: Expenses are paid in the month incurred. Variable: Sales commission................. 4% of sales Fixed: Advertising ..... $190,000 Rent.. 22.000 Salaries. 106,000 Utilities 9,000 Insurance.... 5,000 Depreciation. 15,000 Additional information: a. In April the company will pay $53,750 for restructuring costs. b. Insurance is paid on an annual basis, in November of each year. c. The company plans to purchase investments for $161.250 cash in May. d. The company will purchase for cash $40.000 in new equipment during June. e. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter. f. The company plan to collect $30.000 from common stock 15sued in May. A listing of the company's ledger accounts as of March 31, is given below: $74,000 Assets Cash.. Accounts Receivable (531,200 February Sales; $384.000 March sales) Inventory ...... Prepaid Insurance Property and equipment (net) Total assets....... 415,200 104,000 15.800 886,000 $1,495,000 Liabilities and Stockholders' Equity Accounts payable $112,500 Dividends payable. 15,000 Common Stock 800,000 Retained earnings.. 567,500 Total liabilities and stockholders' equity......... $1,495,000 The company maintains a minimum cash balance of $50,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1.5% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $50,000 in cash. April 74,000 May 50,000 June 50,000 Quarter 74,000 Opening Balance of Cash Receipt of Cash Cash received from debtors - As per Working note above Issue of Common Stock Cash available for disburement 523,200 1,038,000 834,000 50,000 934,000 2,395,200 50,000 2,519,200 597,200 1,088,000 290,250 31,200 190,000 22,000 106,000 9,000 53,750 357,750 48,000 190,000 22,000 106,000 9,000 274,500 24,000 190,000 22,000 106,000 9,000 922,500 103,200 570,000 66,000 318,000 27,000 53,750 161,250 40,000 15,000 2,276,700 242,500 161,250 Creditors for purchase-As per Working note above Sales Commission - 4% of Sales Advertising Rent Salaries Utilities Restructuring cost Purchase of Investment Purchase of Equipment Payment of Dividend Cash paid for disbursements Net Cash available Financing Borrowings (at the beginning of the quarters) Repayments at the end of year) Interest (at 1.5% per month) Total financing Closing cash balance 40,000 15,000 717,200 - 120,000 894,000 40,000 665,500 422,500 170,000 10,000 - 180,000 -7,950 -187,950 234,550 180,000 -180,000 -7,950 -7,950 234,550 170,000 50,000 10,000 50,000