Question
Help with below 1-3 questions Mary and Kay, Inc., a distributor of cosmetics throughout Florida, is in the process of assembling a cash budget for
Help with below 1-3 questions
Mary and Kay, Inc., a distributor of cosmetics throughout Florida, is in the process of assembling a cash budget for the first quarter of 20x1. The following information has been extracted from the company's accounting records:
- All sales are on account. Sixty percent of customer accounts are collected in the month of sale; 30 percent are collected in the following month. Uncollectibles amounting to 10 percent of sales are anticipated, and management believes that only 20 percent of the accounts outstanding on December 31, 20x0, will be recovered and that the recovery will be in January 20x1.
- Sixty percent of the merchandise purchases are paid for in the month of purchase; the remaining 40 percent are paid for in the month after acquisition.
- The December 31, 20x0, balance sheet disclosed the following selected figures: cash, $65,000; accounts receivable, $230,000; and accounts payable, $79,000.
- Mary and Kay, Inc. maintains a $65,000 minimum cash balance at all times. Financing is available (and retired) in $1,000 multiples at an 9 percent interest rate, with borrowings taking place at the beginning of the month and repayments occurring at the end of the month. Interest is paid at the time of repaying principal and computed on the portion of principal repaid at that time.
- Additional data:
January February March
Sales revenue $580,000 $670,000 $685,000
Merchandise purchases 400,000 430,000 550,000
Cash operating costs 106,000 85,000 148,000
Proceeds from sale of equipment 28,000
- Prepare schedule that discloses the firm's total cash collections for January through March.
January. February. March
Collection of accounts receivable. _________, ________, _________
Collection of January sales _________, ________, _________
Collection of February sales _________, ________, _________
Collection of March sales _________, ________, _________
Sale of equipment _________, ________, _________
Total cash collections _________, ________, _________
2.Prepare schedule that discloses the firm's total cash disbursements for January through March.
January. February. March
Payment of accounts payable _________, ________, _________
Payment of January purchases _________, ________, _________
Payment of February purchases _________, ________, _________
Payment of March purchases _________, ________, _________
Cash operating costs _________, ________, _________
Total cash disbursements _________, ________, _________
3.Prepare schedule that summarizes the firm's financing cash flows for January through March.
January. February. March
Beginning cash balance _________, ________, _________
Total receipts _________, ________, _________
Subtotal _________, ________, _________
Less: Total disbursements _________, ________, _________
Cash excess (deficiency) before financing _________, ________, _________
Financing:
Borrowing to maintain $65,000 balance _________, ________, _________
Loan principal repaid _________, ________, _________
Loan interest paid _________, ________, _________
Ending cash balance _________, ________, _________
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