During the last week of August, Oneida Company's owner approaches the bank for a $102,000 loan to be made on September 2 and repaid on November 30 with annual interest of 10%, for an interest cost of $2,550. The owner plans to increase the store's inventory by $60,000 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 $4,000 cash balance, $123,200 of net accounts receivable, and $100,000 of accounts payable. Its budgeted sales, merchandise purchases, and various cash disbursements for the next three months follow.

	September	October	November
Budgeted Figures
Sales	$ 250,000	$ 415,000	$ 420,000
Merchandise purchases	235,000	205,000	195,000
Cash payments
Payroll	20,600	22,000	24,700
Rent	11,000	11,000	11,000
Other cash expenses	34,300	31,000	20,800
Repayment of bank loan			102,000
Interest on the bank loan			2,550

*Operations began in August; August sales were $160,000 and purchases were $105,000.

The budgeted September merchandise purchases include the inventory increase. All sales are on account. The company predicts that 23% of credit sales is collected in the month of the sale, 47% in the month following the sale,19% in the second month, 7% in the third, and the remainder is uncollectible. Applying these percents to the August credit sales, for example, shows that $75,200 of the $160,000 will be collected in September, $30,400 in October, and $11,200 in November. All merchandise is purchased on credit; 90% of the balance is paid in the month following a purchase, and the remaining 10% is paid in the second month. For example, of the $105,000 August purchases, $94,500 will be paid in September and $10,500 in October.

Prepare a cash budget for September October, and November Calculation of cash receipts from sales ------------------ Collected in---- Total Sales Uncollectible August September October November 30. November Accounts Rec. Credit sales from: August September October November Totals $ 160,000 250,000 415,000 420,000 $ 1,245,000 I Calculation of cash payments for merchandise ---Paid in November 30. Total Purchases August September October November Accounts Pay. Purchases from: August September $ 0 105,000 235,000 October November Totals 205,000 195.000 740,000 $ ONEIDA COMPANY Cash Budget For September, October, and November September October Beginning cash balance $ 4,000 Cash receipts November Total cash available Cash payments: Cash Budget For September, October, and November September October Beginning cash balance $ 4,000 Cash receipts November Total cash available Cash payments: 0 Total cash payments Ending cash balance