ILTuuUCL T juaL upp u e c jarys K WIt n request tor a 593.00O, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used: oints a. On April 1, the start of the loan period, the cash balance will be $36,000. Accounts receivable on April 1 will total $179,200, of which $153,600 will be collected during April and $20,480 will be collected during May. The remainder will be uncollectible. b. Past experience shows that 30 % of a month's sales are collected in the month of sale, 60 % in the month following sale, and 8 % in 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: eBook Print References April $232,000 $ 476,000 $296,000 $188,000 $163,500 $135,500 $ 22,800 $22,800 $ 26,900 $ 31,400 $ 31,400 $ 31,400 S 63,600 63,600 May June Sales (all on accounty Merchandine purchases Payroll Lease payents Advertising Equipment purchases Depreciation 41,680 102,000 $17,800 $ 17,800 s 17,800 c Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $162,500 d. In preparing the cash budget, assume that the $93,000 loan will be made in April and repaid in June. Interest on the loan will total $1,280 Required: ed cash cnllertinne fnr Anril Mau and lune and fnr the three mnnthe in total Sales (all on account) Merchandise purchases Payroll Lease payments Advertising Equipment purchases Depreciation $232,000 $188,000 $ 22,800 $ 476,000 $163,500 $ 22,800 $ 31,400 $ 31,400 $ 63,600 $ 296,000 $135,500 $ 26,900 $ 31,400 $ 41,680 102,000 $ 17,800 $ 17,800 $ 17,800 $63,600 c.Merchandise purchases are paid in full during the month following purchase. Accounts paya ble for merchandise March, which will be paid in April, total $162,500. d. In preparing the cash budget, assume that the $93,000 loan will be made in April and repaid in June. Interest on $1,280. 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the expected cash collections for April, May, and June, and for the three months in total. June Quarter April May Total cash collections Required 2
