Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Prime Products hopes to borrow $73,000 on April 1 and repay it plus interest of $1,080 on June 30 . The following data are available

image text in transcribed
image text in transcribed
image text in transcribed
Prime Products hopes to borrow $73,000 on April 1 and repay it plus interest of $1,080 on June 30 . The following data are available for the months April through June, during which the loan will be used: a. On April 1, the start of the loan period, the cash balance will be $41,800. Accounts receivable on April 1 will total $182,000, of which $156,000 will be collected during April and $20,800 will be collected during May. The remainder will be uncollectible. b. The company estimates 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% are bad debts that are never collected. Budgeted sales and expenses for the threemonth period follow: 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 \$175,000. Required: 1. Calculate the expected cash collections for April, May, and June, and for the three months in total. 2. Prepare o cash budget, by month and in total, for the three-month period. Assume the $73,000 loan is made on April 1 and repaid with interest on June 30 . Complete this question by entering your answers in the tabs below. 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 \$175,000. 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. Assume the $73,000 loan is made on April 1 and repaid with interest on June 30 . Complete this question by entering your answers in the tabs below. Calculate the expected cash collections for April, May, and June, and for the three months in total. Prepare a cash budget, by month and in total, for the three-month period. Assume the $73,000 loan is made on April 1 and repaid with interest on June 30 . Note: Cash deficiency, repayments and interest should be indicated by a minus sign

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting

Authors: Thomas H. Beechy, Elizabeth Farrell

4th Edition

0130906263, 978-0130906267

More Books

Students also viewed these Accounting questions