Problem 20-6AA Merchandising: Preparation of cash budgets (for three periods) LO P4 During the last week of August, Oneida Company's owner approaches the bank for a $99,000 loan to be made on September 2 and repaid on November 30 with annual interest of 15%, for an interest cost of $3,713. The owner plans to increase the store's inventory by $60,000 during September and needs the loan to pay for inventory acquisitions. The bank's loan officer needs more information about Oneida's ability to repay the loan and asks the owner to forecast the store's November 30 cash position. On September 1, Oneida is expected to have a $4,500 cash balance, $146,300 of net accounts receivable, and $100,000 of accounts payable. Its budgeted sales, merchandise purchases, and various cash payments for the next three months follow. September $ 230,000 235,000 October $ 405,000 210,000 November $ 440,000 202,000 Budgeted Figures* Sales Merchandise purchases Cash payments Payroll Rent Other cash expenses Repayment of bank loan Interest on the bank loan 20,400 8,000 34,400 21,950 8,000 31,600 24,400 8,000 20,600 99,000 3,713 *Operations began in August; August sales were $190,000 and purchases were $100,000. The budgeted September merchandise purchases include the inventory increase. All sales are on account. The company predicts that 23% of credit sales is collected in the month of the sale, 47% in the month following the sale, 19% in the second month, 7% in the third, and the remainder is uncollectible. Applying these per to the August credit sales, for example, shows that $89,300 of the $190,000 will be collected in September, $36,100 in October, and $13,300 in November. All merchandise is purchased on credit; 60% of the balance is paid in the month following a purchase, and the remaining 40% is paid in the second month. For example, of the $100,000 August purchases, $60,000 will be paid in September and $40,000 in October. Required: Prepare a cash budget for September, October, and November. Complete this question by entering your answers in the tabs below. Calculation Cash Budget Prepare the calculation of cash receipts from sales and calculation of cash payments for merchandise. Calculation of cash receipts from sales --------Collected in------ November 30. Total Sales Uncollectible August September October November Accounts Rec. Credit sales from: $ 190,000 $ 1,900 August September 2,300 October 230,000 405,000 440,000 $ 1,265,000 4,050 4,400 November Totals Calculation of cash payments for merchandise ------Paid in----- November 30. Total Purchases August September October November Accounts Pay. Purchases from: $ 100,000 $ 0 August September 235,000 October November 210,000 202,000 747,000 0 Totals $ Calculation Cash Budget Prepare a cash budget for September, October, and November. (Round your final answers to the nearest whole dollar.) ONEIDA COMPANY November Cash Budget For September, October, and November September October Beginning cash balance $ 4,500 Cash receipts Collection on accounts receivable Receipts from bank loan Total cash available Cash payments: Payments on accounts payable Payroll Rent Other cash expenses Repayment on bank loan Interest on bank loan Total cash payments 0 0 0 Ending cash balance