c W Document 3 2 1 il T Question 1 The president of the rester Prime Products has just approached the company's bank with a request for a 1000.00 day loan. The purpose of the loan is 10 assist the company in acquiring inventories. Because the company has had some dificing offs loans in the past, the loan officer has asked for a cath budget to help determine whether the loan should be made the following dute are available for the month Apr though June, during which the car wil be used a. On April the start of the loan period, the cash balance will be $24.400 Accounts receivable on April two $151200 of which $129.600 will be collected during Art and $17.250 wil be collected during May. The remainder will be uncollectie Post experience shows that of a month's sales are collected in the month of sale on the month foowing and 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 (lot) Herci puchas Payroll Le pays vertising Et ses Depreciation $20, $40.000 1201, $ 114, 119,00 SIT. $ 15,0 5,400 1,0 135,0 19,0 35,00 $ 64,5 4,400 46,400 5 6. $ 19,0 19,400 $ 19,400 c Merchandise purchases are paid in full during the month foliowe purchase Accounts payable for merchandise purchases during March, which will be paid in April total $141.500 d. In preparing the cash budget assume that the 551000 loan will be made in Arlind reped in June Interest on the loan wil total $800 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 c W Document 3 2 1 il T Question 1 The president of the rester Prime Products has just approached the company's bank with a request for a 1000.00 day loan. The purpose of the loan is 10 assist the company in acquiring inventories. Because the company has had some dificing offs loans in the past, the loan officer has asked for a cath budget to help determine whether the loan should be made the following dute are available for the month Apr though June, during which the car wil be used a. On April the start of the loan period, the cash balance will be $24.400 Accounts receivable on April two $151200 of which $129.600 will be collected during Art and $17.250 wil be collected during May. The remainder will be uncollectie Post experience shows that of a month's sales are collected in the month of sale on the month foowing and 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 (lot) Herci puchas Payroll Le pays vertising Et ses Depreciation $20, $40.000 1201, $ 114, 119,00 SIT. $ 15,0 5,400 1,0 135,0 19,0 35,00 $ 64,5 4,400 46,400 5 6. $ 19,0 19,400 $ 19,400 c Merchandise purchases are paid in full during the month foliowe purchase Accounts payable for merchandise purchases during March, which will be paid in April total $141.500 d. In preparing the cash budget assume that the 551000 loan will be made in Arlind reped in June Interest on the loan wil total $800 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
