The president of the retailer Prime Products has just approached the company's bank with a request for a $85,000,90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficuity 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 Dite available for the months Aptil through June during which the loan will be used- 4. On Aprili, the start of the foan period, the cash balance will be $13,600. Accounts receivabie on April 1 will total $168,000, of which $144,000 wili be collected during Aptil and $19,200 will be collected during May. The remainder will be uncollectible b. Past experience shows that 305 of a month's sales are collected in the month of 5 aje, 60% in the month following sale and 89 in the second month forlowing sale The othet 2% is bad debts that are never collected. Budgeted sales and expenses for the three? month period follow $1200 c) Mercharidise purchases are pald in full duting the month following purchase, Accounts payable for mierchandise purchases during March, which will be paic in April totai $155.000 d. In prepating the cash budget assume that the 585,000 loan will be made in April and repaid in June, interegt on the loan will total 51,200 Required 1. Colculate the espected castyeol ections loc Aoni, May, and june, ind for the there months in total 2. Prepare a cash bucget, by monthand in total for the three-montin pecood Complete this question to entering your answers in the tobs below. The president of the retailer Prime Products has just approached the company's bank with a request for a $85,000,90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficuity 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 Dite available for the months Aptil through June during which the loan will be used- 4. On Aprili, the start of the foan period, the cash balance will be $13,600. Accounts receivabie on April 1 will total $168,000, of which $144,000 wili be collected during Aptil and $19,200 will be collected during May. The remainder will be uncollectible b. Past experience shows that 305 of a month's sales are collected in the month of 5 aje, 60% in the month following sale and 89 in the second month forlowing sale The othet 2% is bad debts that are never collected. Budgeted sales and expenses for the three? month period follow $1200 c) Mercharidise purchases are pald in full duting the month following purchase, Accounts payable for mierchandise purchases during March, which will be paic in April totai $155.000 d. In prepating the cash budget assume that the 585,000 loan will be made in April and repaid in June, interegt on the loan will total 51,200 Required 1. Colculate the espected castyeol ections loc Aoni, May, and june, ind for the there months in total 2. Prepare a cash bucget, by monthand in total for the three-montin pecood Complete this question to entering your answers in the tobs below
