Faces Au Natural Corp., a distributor of natural cosmetics, is ready to begin it
ID: 2503749 • Letter: F
Question
Faces Au Natural Corp., a distributor of natural cosmetics, is ready to begin its third quarter, in which peak sales occur. The company has requested a $52,000, 90-day loan from its bank to help meet cash requirements during the quarter. Because the company has experienced difficulty in paying off its loans in the past, the bank's loan officer has asked the company to prepare a cash budget for the quarter. In response to this request, the following data have been assembled:
Equipment costing $23,000 will be purchased for cash during July.
In preparing the cash budget, assume that the $52,000 loan will be made in July and repaid in September. Interest on the loan will total $1,900.
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 a cash budget, by month and in total, for the third quarter. (Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Expenses are paid in the month incurred. Do not round intermediate calculations. Total Financing should be indicated with a minus sign when the company is repaying amounts that were previously borrowed. )
Faces Au Natural Corp., a distributor of natural cosmetics, is ready to begin its third quarter, in which peak sales occur. The company has requested a $52,000, 90-day loan from its bank to help meet cash requirements during the quarter. Because the company has experienced difficulty in paying off its loans in the past, the bank's loan officer has asked the company to prepare a cash budget for the quarter. In response to this request, the following data have been assembled:
Explanation / Answer
Cash Budget
July August September Quarter - Total Cash Balance, Beginning $42,000 $3,400 ($12,400) $33,000 Add :Receipts Collections from Customers $264,400 $321,200 $394,400 $980,000 Total Cash Available $306,400 $324,600 $382,000 $1,013,000 $0 Less : Disbursements $0 Merchandise Purchases $166,000 $161,000 $151,000 $478,000 Salaries and Wages $68,000 $68,000 $58,000 $194,000 Advertising $70,000 $80,000 $90,000 $240,000 Rent Payment $28,000 $28,000 $28,000 $84,000 Equipment Purchases $23,000 $0 $0 $23,000 Total Disbursement $355,000 $337,000 $327,000 $1,019,000 Excess of (deficiency) of receipts over disbursements ($48,600) ($12,400) $55,000 ($6,000) Financing Borrowings $52,000 $0 $0 $52,000 Repayments $0 $0 ($52,000) ($52,000) Interest $0 $0 ($1,900) ($1,900) Total Financing $52,000 $0 ($53,900) ($1,900) Cash Balance, Ending $3,400 ($12,400) $1,100 ($7,900)Related Questions
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