Northeast Auto Parts, a family-owned auto parts store, began January with $10,60
ID: 2460461 • Letter: N
Question
Northeast Auto Parts, a family-owned auto parts store, began January with $10,600 cash. Management forecasts that collections from credit customers will be $11,300 in January and $14,700 in February.The store is scheduled to receive $6,500 cash on a business note receivable in January. Projected cash payments include inventory purchases ($14,400 in January and $12,200 in February) and selling and administrative expenses ($3,500 each month). Northeast Auto Parts's bank requires a $10,000 minimum balance in the store's checking account. At the end of any month when the account balance falls below $10,000, the bank automatically extends credit to the store in multiples of $1,000. Northeast Auto Parts borrows as little as possible and pays back loans in quarterly installments of $2,500, plus 33% APR interest on the entire unpaid principal. The first payment occurs three months after the loan.
1. Please
Northern Auto Parts
Cash Budget
January and February
January
February
Beginning cash balance
?
?
Cash receipts from customers
?
?
Cash receipt on note receivable
?
?
Cash available
?
Cash payments:
?
?
Purchases of inventory
?
?
Selling and administrative expenses
?
?
Total cash payments
Ending cash balance before financing
?
Less:
Minimum cash balance desired
?
?
Projected cash excess (deficiency)
?
Total effects of financing
?
?
Ending cash balance
?
?
prepare Northeast Auto Parts's cash budget for January and February.Explanation / Answer
Answer:
1)
2)
It will have to borrwow $2,000 in february.
Northern Auto Parts Cash Budget January and February January February Beginning cash balance 10600 10500 Cash receipts from customers 11300 14700 Cash receipt on note receivable 6500 Cash available 28400 25200 Cash payments: Purchases of inventory 14400 12200 Selling and administrative expenses 3500 3500 Total cash payments 17900 15700 Ending cash balance before financing 10500 9500 Less: Minimum cash balance desired 10000 10000 Projected cash excess (deficiency) 500 -500 Total effects of financing 0 1000 (Multiples of $1,000) Ending cash balance 10500 10500Related Questions
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