Ch 20 Homework Saved Save& Help CI 2 Problem 20-6AA Merchar. ising: Preparation of cash budgets (for three periods) LO P4 During the last week of August, Oneir Company's owner approaches the bank for a $100,000 loan to be made on September 2 and repaid on November 30 with annual inrarest of 12 % , for an interest cost of $3,000. The owner plans to increase the store's inventory by $80,000 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 $5,000 cash balance, $159,100 of net accounts receivable, and $125,000 of accounts payable. Its budgeted sales, merchandise purchases, and various cash disbursements for the next three months follow 5 points elook Print Budgeted Figures Relerences September $ 250,000 240,000 October $ 375,000 225,000 Novenber $ 400,000 200,000 Sales Merchandise purehases Cash paymenta Payroil 20,000 10, 35, 00 22,000 10,000 30,000 24,000 10, 0 20,000 100,000 3,000 Rent Other cash expenses Repaynent of bank loan Intereat on the bank loan "Operations began in August August sales were $215,000 and purchases were $125,000 The budgeted September merchandise purchases include the inventory increase. All sales are on account. The company predicts that 25% of credit sales is collected in the month of the sale, 45% in the month following the sale, 20 % in the second month, 9% in the third, and the remainder is uncollectible. Applying these percents to the August credit sales, for example, shows that $96,750 of the $215,000 will be collected in September, $43,000 in October, and $19,350 in November. All merchandise is purchased on credit; 80 % of the balance is paid in the month following a purchase, and the remaining 20% is paid in the second month. For example, of the $125,000 August purchases, $100,000 will be paid in September and $25.000 in October Iron and Coffee-.. Mason Federated... Cus Ch 20 Hor work Saved 2 quired: Prepare a cash budget for September, October, and November. Calculation of cash receipts from sales 5 points -Collected in-- November 30. Total Sales Uncollectible August October September November Accounts Rec. Credit sales from: eBook $ 215,000 August Print September 250,000 References October 375,000 November 400,000 Totals Calculation of cash payments for merchandise -Paid in- November 30. Total Purchases August Accounts Pay September October November Purchases from $ 125,000 August September 240,000 October 225,000 200,000 November $ 790,000 Totals Ch 20 Homework Saved 2 ONEIDA COMPANY Cash Budget points For September, October, and November September October November eBook Beginning cash balance 5,000 $ Cash receipts Print References Total cash available Cash payments: Total cash payments Ending cash balance