Todd Enterprises is preparing a cash budget for the second quarter of the coming year. The following data have been forecasted: Sales ....... Merchandise purchases Operating expenses: Payroll. Advertising Rent.... Depreciation. End of April balances: Cash.... Bank loan payable April May $150,000 $157,500 107,000 112,400 13,600 5,400 2,500 7,500 30,000 26,000 14,280 5,700 2,500 7,500 Additional data: (1) Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000. (2) Purchases are all on credit, with 40% paid in the month of purchase and 60% paid in the following month. (3) Operating expenses are paid in the month they are incurred. (4) A minimum cash balance of $25,000 is required at the end of each month. (5) Loans are used to maintain the minimum cash balance. At the end of each month, interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month. Repayments are made at the end of the month if the cash balance exceeds $25,000. Prepare the company's cash budget for May. Show the ending loan balance at May 31.

Todd Enterprises is preparing a cash budget for the second quarter of the coming year. The following data have been forecasted: Sales ....... Merchandise purchases Operating expenses: Payroll. Advertising Rent.... Depreciation. End of April balances: Cash.... Bank loan payable April May $150,000 $157,500 107,000 112,400 13,600 5,400 2,500 7,500 30,000 26,000 14,280 5,700 2,500 7,500 Additional data: (1) Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000. (2) Purchases are all on credit, with 40% paid in the month of purchase and 60% paid in the following month. (3) Operating expenses are paid in the month they are incurred. (4) A minimum cash balance of $25,000 is required at the end of each month. (5) Loans are used to maintain the minimum cash balance. At the end of each month, interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month. Repayments are made at the end of the month if the cash balance exceeds $25,000. Prepare the company's cash budget for May. Show the ending loan balance at May 31.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 34E: A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and...

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