PLease help I am having trouble with this...... (CAsh Budget) The Sharpe Corp pr

Question

PLease help I am having trouble with this...... (CAsh Budget) The Sharpe Corp projected sales for the firsteight months of 2004 are as follows: Janurary        $90,000 February       120,000 March           135,000 April             240,000 May             $300,000 June               270,000 July                225,000 August           150,000 Of Sharpes sales, 10 % is for cash, another 60 percent iscollected in the month following sale, and 30 % is collected in thesecond month following sale. NOvember and December for 2003 were$220,000 and $175,000, resepctively. Sharpe purchases its raw materials two months in advance ofits slaes equal to 60% of their final sales price. The supplier ispaid one month after its delivery. For example, purchases for Aprilsales are made in Feb. and payment is made in March. In addition, Sharpe pays $10,000 per month for rent and$20,000 each month for other expenditures. Tax repayments of$222,500 are made each quarter, beginning in March. The company's cash balance at Dec 31, 2003 was $22,000; aminimum balance of $15,000 must be maintained at all times. Assumethat any short term financing needed to maintain the cash balanceis paid off in the month following the month of financing ifsufficient funds are available. Interest on short term loans (12%)is paid monthly. Borrowing to meet estimated monthly cash needstakes place at the beginning of the month. Thus, if in the month of April the firm expects to have a need for an additional$60,500, these funds would be borrowed at the beginning of Aprilwith interest of $605 (.12*1/12*$60,500)owed for April and paid atthe beginning of May. a. prepare a cash budget for Sharpe covering the first sevenmonths of 2004. b. Sharpe has $200,000 in notes payable due in July that mustbe repaid or renegotiated for an extension. Will the firm haveample cash to repay the notes? PLease help I am having trouble with this...... (CAsh Budget) The Sharpe Corp projected sales for the firsteight months of 2004 are as follows: Janurary        $90,000 February       120,000 March           135,000 April             240,000 May             $300,000 June               270,000 July                225,000 August           150,000 Of Sharpes sales, 10 % is for cash, another 60 percent iscollected in the month following sale, and 30 % is collected in thesecond month following sale. NOvember and December for 2003 were$220,000 and $175,000, resepctively. Sharpe purchases its raw materials two months in advance ofits slaes equal to 60% of their final sales price. The supplier ispaid one month after its delivery. For example, purchases for Aprilsales are made in Feb. and payment is made in March. In addition, Sharpe pays $10,000 per month for rent and$20,000 each month for other expenditures. Tax repayments of$222,500 are made each quarter, beginning in March. The company's cash balance at Dec 31, 2003 was $22,000; aminimum balance of $15,000 must be maintained at all times. Assumethat any short term financing needed to maintain the cash balanceis paid off in the month following the month of financing ifsufficient funds are available. Interest on short term loans (12%)is paid monthly. Borrowing to meet estimated monthly cash needstakes place at the beginning of the month. Thus, if in the month of April the firm expects to have a need for an additional$60,500, these funds would be borrowed at the beginning of Aprilwith interest of $605 (.12*1/12*$60,500)owed for April and paid atthe beginning of May. a. prepare a cash budget for Sharpe covering the first sevenmonths of 2004. b. Sharpe has $200,000 in notes payable due in July that mustbe repaid or renegotiated for an extension. Will the firm haveample cash to repay the notes? (CAsh Budget) The Sharpe Corp projected sales for the firsteight months of 2004 are as follows: Janurary        $90,000 February       120,000 March           135,000 April             240,000 May             $300,000 June               270,000 July                225,000 August           150,000 Of Sharpes sales, 10 % is for cash, another 60 percent iscollected in the month following sale, and 30 % is collected in thesecond month following sale. NOvember and December for 2003 were$220,000 and $175,000, resepctively. Sharpe purchases its raw materials two months in advance ofits slaes equal to 60% of their final sales price. The supplier ispaid one month after its delivery. For example, purchases for Aprilsales are made in Feb. and payment is made in March. In addition, Sharpe pays $10,000 per month for rent and$20,000 each month for other expenditures. Tax repayments of$222,500 are made each quarter, beginning in March. The company's cash balance at Dec 31, 2003 was $22,000; aminimum balance of $15,000 must be maintained at all times. Assumethat any short term financing needed to maintain the cash balanceis paid off in the month following the month of financing ifsufficient funds are available. Interest on short term loans (12%)is paid monthly. Borrowing to meet estimated monthly cash needstakes place at the beginning of the month. Thus, if in the month of April the firm expects to have a need for an additional$60,500, these funds would be borrowed at the beginning of Aprilwith interest of $605 (.12*1/12*$60,500)owed for April and paid atthe beginning of May. a. prepare a cash budget for Sharpe covering the first sevenmonths of 2004. b. Sharpe has $200,000 in notes payable due in July that mustbe repaid or renegotiated for an extension. Will the firm haveample cash to repay the notes?

Explanation / Answer

0m

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.