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Prime Products hopes to borrow $79,000 on April 1 and repay it plus interest of $1,140 on June 30. The following data are available for the months April through June, during which the loan will be used: a. On April 1, the start of the loan period, the cash balance will be $16,500. Accounts receivable on April 1 will total $190,400, of which $163,200 will be collected during April and $21,760 will be collected during May. The remainder will be uncollectible. b. The company estimates 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% are bad debts that are never collected. Budgeted sales and expenses for the three- month period follow: Sales (all on account) Merchandise purchases Payroll Lease payments Advertising Equipment purchases Depreciation April $ 312,000 $ 204,000 $ 24,000 $ 24,800 $ 79,200 $ 17,200 May $ 428,000 $ 162,000 $ 24,000 $ 24,800 $ 79,200 $ 17,200 June $ 319,000 $ 178,500 $ 18,900 $ 24,800 $74,480 $ 78,000 $ 17,200 c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $160,000. Required: 1. Calculate the expected cash collections for April, May, and June, and for the three months in total. 2. Prepare a cash budget, by month and in total, for the three-month period. Assume the $79,000 loan is made on April 1 and repaid with interest on June 30.

Prime Products hopes to borrow $79,000 on April 1 and repay it plus interest of $1,140 on June 30. The following data are available for the months April through June, during which the loan will be used: a. On April 1, the start of the loan period, the cash balance will be $16,500. Accounts receivable on April 1 will total $190,400, of which $163,200 will be collected during April and $21,760 will be collected during May. The remainder will be uncollectible. b. The company estimates 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% are bad debts that are never collected. Budgeted sales and expenses for the three- month period follow: Sales (all on account) Merchandise purchases Payroll Lease payments Advertising Equipment purchases Depreciation April $ 312,000 $ 204,000 $ 24,000 $ 24,800 $ 79,200 $ 17,200 May $ 428,000 $ 162,000 $ 24,000 $ 24,800 $ 79,200 $ 17,200 June $ 319,000 $ 178,500 $ 18,900 $ 24,800 $74,480 $ 78,000 $ 17,200 c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $160,000. Required: 1. Calculate the expected cash collections for April, May, and June, and for the three months in total. 2. Prepare a cash budget, by month and in total, for the three-month period. Assume the $79,000 loan is made on April 1 and repaid with interest on June 30.

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 24Q: Chemical Enterprises issues a note in the amount of $156,000 to a customer on January 1, 2018. Terms...
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Prime Products hopes to borrow $79,000 on April 1 and repay it plus interest of $1,140 on June 30. The following data are available for the months April through June, during which the loan will be used: a. On April 1, the start of the loan period, the cash balance will be $16,500. Accounts receivable on April 1 will total $190,400, of which $163,200 will be collected during April and $21,760 will be collected during May. The remainder will be uncollectible. b. The company estimates 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% are bad debts that are never collected. Budgeted sales and expenses for the three- month period follow: Sales (all on account) Merchandise purchases Payroll Lease payments Advertising Equipment purchases Depreciation April May $ 312,000 $ 204,000 $ 24,000 $ 24,800 $ 79,200 $ 428,000 $ 162,000 $ 24,000 $ 24,800 $ 79,200 $ 17,200 $ 17,200 c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $160,000. Required: 1. Calculate the expected cash collections for April, May, and June, and for the three months in total. 2. Prepare a cash budget, by month and in total, for the three-month period. Assume the $79,000 loan is made on April 1 and repaid with interest on June 30. Required 1 Required 2 Complete this question by entering your answers in the tabs below. Total cash collections Calculate the expected cash collections for April, May, and June, and for the three months in total. June $319,000 $ 178,500 $ 18,900 $ 24,800 $74,480 $ 78,000 $ 17,200 Schedule of Expected Cash Collections April May Required 1 June Quarter Required 2 >
Transcribed Image Text:Prime Products hopes to borrow $79,000 on April 1 and repay it plus interest of $1,140 on June 30. The following data are available for the months April through June, during which the loan will be used: a. On April 1, the start of the loan period, the cash balance will be $16,500. Accounts receivable on April 1 will total $190,400, of which $163,200 will be collected during April and $21,760 will be collected during May. The remainder will be uncollectible. b. The company estimates 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% are bad debts that are never collected. Budgeted sales and expenses for the three- month period follow: Sales (all on account) Merchandise purchases Payroll Lease payments Advertising Equipment purchases Depreciation April May $ 312,000 $ 204,000 $ 24,000 $ 24,800 $ 79,200 $ 428,000 $ 162,000 $ 24,000 $ 24,800 $ 79,200 $ 17,200 $ 17,200 c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $160,000. Required: 1. Calculate the expected cash collections for April, May, and June, and for the three months in total. 2. Prepare a cash budget, by month and in total, for the three-month period. Assume the $79,000 loan is made on April 1 and repaid with interest on June 30. Required 1 Required 2 Complete this question by entering your answers in the tabs below. Total cash collections Calculate the expected cash collections for April, May, and June, and for the three months in total. June $319,000 $ 178,500 $ 18,900 $ 24,800 $74,480 $ 78,000 $ 17,200 Schedule of Expected Cash Collections April May Required 1 June Quarter Required 2 >
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a cash budget, by month and in total, for the three-month period. Assume the $79,000 loan is made on April 1 and repa with interest on June 30. Note: Cash deficiency, repayments and interest should be indicated by a minus sign. Beginning cash balance Add receipts: Collections from customers Total cash available Less cash disbursements: Merchandise purchases Payroll Lease payments Advertising Equipment purchases Total cash disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Interest Prime Products Cash Budget April Total financing Ending cash balance May June Quarter
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a cash budget, by month and in total, for the three-month period. Assume the $79,000 loan is made on April 1 and repa with interest on June 30. Note: Cash deficiency, repayments and interest should be indicated by a minus sign. Beginning cash balance Add receipts: Collections from customers Total cash available Less cash disbursements: Merchandise purchases Payroll Lease payments Advertising Equipment purchases Total cash disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Interest Prime Products Cash Budget April Total financing Ending cash balance May June Quarter
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