Janus Products, Inc., is a merchandising company that sells binders, paper, and
ID: 2461724 • Letter: J
Question
Janus Products, Inc., is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Janus Products has had to borrow money during the third quarter to support peak sales of back-to-school materials, which occur during August. The following information has been assembled to assist in preparing a cash budget for the quarter:
Credit sales are collected over a three-month period with 10% collected in the month of sale, 60% in the month following sale, and 30% in the second month following sale. May sales totaled $34,000, and June sales totaled $40,000.
Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable for inventory purchases at June 30 total $12,900.
The company maintains its ending inventory levels at 75% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $19,800.
The cash balance on June 30 is $8,000; the company must maintain a cash balance of at least this amount at the end of each month.
The company has an agreement with a local bank that allows it to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $50,000. The interest rate on these loans is 2% per month, and for simplicity, we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.
Prepare a schedule of expected cash collections for July, August, and September and for the quarter in total. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations.)
Prepare the following for merchandise inventory:
A merchandise purchases budget for July, August, and September. (Input all amounts as positive values. Do not round intermediate calculations.)
A schedule of expected cash disbursements for merchandise purchases for July, August, and September and for the quarter in total. (Leave no cells blank - be certain to enter "0" wherever required.)
Prepare a cash budget for July, August, and September and for the quarter in total. (Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Total Financing should be indicated with a minus sign when the company is repaying amounts that were previously borrowed. Selling and Administrative expenses are paid in the month in which the expenses are incurred. Leave no cells blank - be certain to enter "0" wherever required.)
Janus Products, Inc., is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Janus Products has had to borrow money during the third quarter to support peak sales of back-to-school materials, which occur during August. The following information has been assembled to assist in preparing a cash budget for the quarter:
Explanation / Answer
Answer for question no.1:
The above values are calculated as follows:
Answer for question no.2.a:
Closing stock calculation is done as under:
Answer for question no.2.b:
Schedule of Expected Cash Collections July August September Quarter - Total Cash sales $8,800.00 $14,800.00 $10,800.00 $34,400.00 Sales on account: May $8,160.00 $8,160.00 June $19,200.00 $9,600.00 $28,800.00 July $3,520.00 $21,120.00 $10,560.00 $35,200.00 August $5,920.00 $35,520.00 $41,440.00 September $4,320.00 $4,320.00 Total cash collections $39,680.00 $51,440.00 $61,200.00 $152,320.00Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.