Question
The beginning cash balance is $15,000. Sales are forecasted at $900,000 of which 75% will be on credit. 70% of credit sales are expected to
The beginning cash balance is $15,000. Sales are forecasted at $900,000 of which 75% will be on credit. 70% of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $365,000. Accounts Receivable from previous accounting periods totaling $20,000 will be collected in the current year. The company is required to make a $20,000 loan payment including annual interest on the last day of every year. The loan balance as of the beginning of the year is $90,000, and the annual interest rate is 10%.
Instructions
Compute the excess of cash receipts over cash disbursements and the ending cash balance. Show your work.
Cash collections:
Accounts receivable collected
Cash sales:
Credit sales:
Cash expenditures
Loan payment
Interest payment
Net increase in cash
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