3) The following information pertains to Amigo Corporation: Month Sales Purchase
ID: 2573100 • Letter: 3
Question
3) The following information pertains to Amigo Corporation:
Month Sales Purchases
July $30,000 $10,000
August 34,000 12,000
September 38,000 14,000
October 42,000 16,000
November 48,000 18,000
December 60,000 20,000
• Cash is collected from customers in the following manner:
Month of sale 40%
Month following sale 40%
Two months following sale 10%
Uncollectible Accounts 10%
• 60% of purchases are paid for in cash in the month of purchase, and the other 40% is paid the following month.
Required: Complete the cash budget (no discounts) for the 4th quarter.
October November December
Beginning Balance: $10,000
Cash Collections from:
August
September
October
November
December
--------------- --------------- -----------------
Total Cash Collections
Total Cash Available
Cash Payments from:
September
October
November
December
-------------- ---------------- -------------------
Total Cash Payments
Ending Cash Balance
Amigo has $50,000 principal loan balance and needs to pay it, but also needs to keep a $10,000 minimum balance. What month is the earliest that Amigo can pay off this loan while keeping the minimum cash balance? ___________________
Explanation / Answer
Deceber is the earliest month for Amigo to pay off the loan balace of $50,000, as it has sufficient cash balance to meet the minimum cash balance requirement.
AMIGO CORPORATION Cash Budget for the quarter ending December October November December Total Beginning balance 10000 30200 52800 10000 Cash collections from: August sales 3400 0 0 3400 September 15200 3800 0 19000 October 16800 16800 4200 37800 November 0 19200 19200 38400 December 0 0 24000 24000 Total cash collections 35400 39800 47400 122600 Total cash available 45400 70000 100200 132600 Cash payments for: September 5600 0 0 5600 October 9600 6400 0 16000 November 0 10800 7200 18000 December 0 0 12000 12000 Total cash payments 15200 17200 19200 51600 Ending cash balance 30200 52800 81000 81000Related Questions
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