Chapter 1, Problem 42P

1. The ABC Company expects to have sales of $30,000 in January, $33,000 in February, and $38,000 in March. If 20 percent of sales are for cash, 40 percent are credit sales paid in the month following the sale, and 40 percent are credit sales paid 2 months following the sale, what are the cash receipts from sales in January? 2. The ABC Company expects to have sales of $30,000 in January, $33,000 in February, and $38,000 in March. If 20 percent of sales are for cash, 40 percent are credit sales paid in the month following the sale, and 40 percent are credit sales paid 2 months following the sale, what are the cash receipts from sales in February? 3. The ABC Company expects to have sales of $30,000 in January, $33,000 in February, and $38,000 in March. If 20 percent of sales are for cash, 40 percent are credit sales paid in the month following the sale, and 40 percent are credit sales paid 2 months following the sale, what are the cash receipts from sales in March?

Nazmi Shah Sdn Bhd wishes to expand its business by opening an additional two more stores and needs to apply a bank loan. Therefore, there is needed to prepare an acceptable three-month financial plan for January until March. The following are sales and purchase information: 40 percent of the sales incurred are cash sales, while the balance are credit sales and will be collected equally for the second and third month after the sales. Nazmi Shah pays 50 percent of its purchase immediately and the balance will be paid in the month after purchases.                Additional information:       i. Labor expenses are 10 percent of the current month’s sales.ii. Overhead expenses are recorded at RM10,000 per month.iii. Interest payments of RM8,000 are due in January and March.iv. A cash dividend of RM40,000 is scheduled to be paid in February.v. Depreciation expenses are RM10,000 per month.vi. Tax payment of RM25,000 are due in January and April.vii. Purchase a new asset of RM40,000 in January…

Assume you are thinking about starting a business and would like to forecast your cash needs for the next six months. You expect sales to be approximately $30,000 per month for the first 12 months and your purchases to support sales will be approximately 60% of sales. You anticipate about 20% of your sales will be cash and 80% collected the following month. Your supplier has agreed to extend credit for 70 days at no cost (i.e. you will pay your bills on a two month lag). Your monthly expenses for rent, wages, utilities, and so forth will be approximately $3,500 per month. You have deposited $15,000 in a checking account to begin your operations and would like to maintain a minimum balance of $5,000 in that account. 1. Explain the purpose of creating budgets and how your budget will help the business remain capitalized 2 . Will you need additional funds at some point? Justify your answer. 3. How would you raise capital in the future?

1.A financial analyst for Carroll Company has prepared the following sales and cash disbursement estimates for the period February-June of the current year. Cash disbursements Month Sales February $500 $400 March 600 300 April May 400 600 200 500 June 200 200 Manager noted that historically, 30% of sales have been for cash. Of credit sales, 70% are collected 1 month after the sale, and the remaining 30% are collected 2 months after the sale. The firm wishes to maintain a minimum ending balance in its cash account of $25. Balances above this amount would be invested in short- term government securities (marketable securities), whereas any deficits would be financed through short-term bank borrowing (notes payable). The beginning cash balance at April 1 is $115. a. Prepare a cash budget for April, May, and June. b. How much financing, if any, at a maximum would Carroll Company require to meet its obligations during this 3-month period?

Based on Robichek et al. (1965). The Korvair Department Store has $100,000 in available cash. At the beginning of each of the next six months, Korvair will receive revenues and pay bills as listed in the file P04_112.xlsx. It is clear that Korvair will have a short-term cash flow problem until the store receives revenues from the Christmas shopping season. To solve this problem, Korvair must borrow money. At the beginning of July, the company takes out a six-month loan. Any money borrowed for a six-month period must be paid back at the end of December along with 9% interest (early payback does not reduce the total interest of the loan). Korvair can also meet cash needs through month-to-month borrowing. Any money borrowed for a one-month period incurs an interest cost of 2.5% per month. Determine how Korvair can minimize the cost of paying its bills on time.

Suppose that LilyMac Photography has annual sales of $233,000, cost of goods sold of $168,000, average inventories of $4,800, average accounts receivable of $25,600, and an average accounts payable balance of $7,300. Assuming that all of LilyMac's sales are on credit, what will be the firm's cash cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.) What will be the firm's operating cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Melody Inc. had a November ending cash balance of $15,000. As well, it had sales of $10,000 in November, $20,000 in December, and projects sales of $25,000 for January, $30,000 for February, and $35,000 for March. The firm collects its receivables in the month after the sale. Given this information, calculate its cash balance at the end of March. Assume that every month has 30 days. $75,000 $80,000 $90,000 $100,000 $110,000

A firm has projected sales in May, June, and July of $100, $200, and $300, respectively. The firm makes 20 percent of sales for cash and collects the balance one month following the sale. The firm's total cash receipts in July a. are $200. b. are $220. c. are $180. d. cannot be determined with the information provided.

A firm has projected sales in May, June, and July of $100, $200, and $300, respectively. The firm makes 20 percent of sales for cash and collects the balance one month following the sale. The firm's total cash receipts in July a. are $200.b. are $220.c. are $180.d. cannot be determined with the information provided.