The president of Univax,Inc has just approached the company\'s bank seeking shor

Question

The president of Univax,Inc has just approached the company's bank seeking short-term financing for the coming year, Year 2. Univax is a distributor hat the loan request must be accompanied by a detailed cash budget that shows the quarters in which y's bank seeking short-term fnancing for r of commercial vacuum cleaners. The bank has stated financing will be needed, as well as repayments can be made financing will be needed, as well as the amounts that will b e needed and the quarters in which To provide this information for rom which a cash budget can be prepared Budgeted sales and merchandise purchases for Year 2, as well as actual sales and purchases for the last quarter of Year 1, are as follows a Merchandise Sales Purchases $440,000$340,000 $540,000 $420,000 Year 1 Fourth quarter actual Year 2 First quarter estimated Second quarter estimated $640,000 $470000 Third quarter estmated $740,000 $530,000 Fourth quarter estimated $620,000 $400,000 another 45% in The company typically collects 53%of aquaers sales before thequarterendsan the following quarter. The remainder is uncollectible. This pattern of collecions is now being experienced in the actual data for the Year 1 fourth quarter b. C. Some 15% of a quarter s merchandise purchases are paid tor white quartor The remainder s d Selling and administrative expenses for Year 2 are budgeted at $83 000 per quarter plus 8% of paid in the tollowing quarter sales Of the ixed amount $24,000 each quarter is depreciation in the third quarler cash balance of at least $17,000 hnd purchay e vi be made an fotowd dunng the year 9060 in the second quarter and $49 400 e The company will pay $13,000 in cash dividends each quarter t Land purchases will be made as follows during the year $90,000 in the second quarter and $49,400 g The Cash account contained 19,000 at the end of Year 1. The company must maintain a minimum h The company has an agreement with a local bank that allows the company to borrow in increments of each quarter, up to a total loan balance of $100,000 The interest rate compounded those loans is 1% permonth and for simplicity, w" wil assume Patrterest is The company would, as tar as it is able, repay the loan plus accumulated interest at the end of the year Al present the company has no loans outstanding

Explanation / Answer

1a. Schedule of expected cash collections on sales:

1 b. Schedule of expected cash disbursements for merchandise purchases:

2. Expected cash disbursements for selling and administrative expenses:

3. Cash Budget for Year 2:

First Second Third Fourth Total $ $ $ $ $ Year 1 - Fourth quarter sales 198,000 198,000 Year 2- First quarter sales 286,200 243,000 529,200 Year 2 - Second quarter sales 339,200 288,000 Year 2 - Third quarter sales 392,200 333,000 Year 2 - Fourth quarter sales 328,600 Total cash collections 484,200 582,200 680,200 661,600

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