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Part A: Structured Question (7%) Herbal Care Corp., a distributor of herb-based sunscreens, is ready to begin its third quarter, in which peak sales occur.

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Part A: Structured Question (7%) Herbal Care Corp., a distributor of herb-based sunscreens, is ready to begin its third quarter, in which peak sales occur. The company has requested a $60,000,30-day loan from its bank to belp meet cash requirements, Since Herbal Care has experienced difficulty in paying off its loans in the past, the loan officer at the bank has asked the company to prepare a cash budget for the 2019 quarter. In response to this request, the following data has been assembled. - On July 1, the beginning of the third quarter, the company will have a cash balance of $55.000. - Actual sales for the last two months and budgeted sales for the third quarter follow: Past experiences show that 25% of a month's sales are collected in the month of the sale, 70% in the month following the sale, and 1% in the second month following the sale. The remainder is uncollectible. - Budgeted merchandise purchases and budgeted expenses for the third quarter are given below: Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases on June 30 , which will be paid during July, total $180,000. - Equipment costing $10,000 will be purchased for cash during August. - In preparing the cash budget, assume that the $60,000 loan will be made on August 31 . 2019 and repaid on September 30, 2019. Interest on the loan will be calculated at 10. per annum

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