During the last week of August, Oneida Company's owner approaches the bank for a $100,000 loan to be made on September 2 and repaid on November 30 with annual interest 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. Budgeted Figures Sales September $250,0e0 248,eee November $ 400.00e October 375,0ee 225,0ee Merchandise purchases Cash payments Payroll Rent 28e,eee 24,0ee 20,eee 10,000 22,000 10,000 10,000 Other cash expenses Repayment of bank loan Interest on the bank loan 35,000 30,eee 28.000 100,00e 3,eee 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. Calculation of cash receipts from sales -Collected in---- November 30. September Accounts Rec. Total Sales Uncollectible August October November Credit sales from S 215,000 August September 250,000 375.000 October November 400,000 Totals Calculation of cash payments for merchandise --Paid in-- November 30. Total Accounts Pay. August September October November Purchases Purchases from S 125,000 August September 240,000 October 225,000 November 200.000 S 790,000 Totals ONEIDA COMPANY Cash Budget For September, October, and November September October November Beginning cash balance 5,000 Cash receipts Total cash available Cash payments: Total cash payments Ending cash balance