Question

Problem 20-6AA Merchandising: Preparation of cash budgets (for three periods) LO P4 During the last week of August, Oneida Company's owner approaches the bank for a $100,000 loan to be made on September 2 and repaid on November 30 with annual interest of 12%, for an interest cost of $3,000. The owner plans to increase the store's inventory by $80,000 during September and needs the loan to pay for inventory acquisitions. The bank's loan officer needs more information about Oneida's ability to repay the loan and asks the owner to forecast the store's November 30 cash position. On September 1 Oneida is expected to have a $5,000 cash balance, $159,100 of net accounts receivable, and $125,000 of accounts payable. Its budgeted sales, merchandise purchases, and various cash disbursements for the next three months follow September October $250,000 $375,000 240,000 225,000 November $400,000 200,000 Budgeted Figures Sales Merchandise purchases Cash payments Payroll Rent Other cash expenses Repayment of bank loan Interest on the bank loan 20, oee 10,000 35,000 22,000 10,000 30,000 24,000 10,eee 20,000 100,000 3,000 "Operations began in August, August sales were $215,000 and purchases were $125.000 The budgeted September merchandise purchases include the inventory increase. All sales are on account. The company predicts that 25% of credit sales is collected in the month of the sale, 45% in the month following the sale 20% in the second month, 9% in the third and the remainder is uncollectible. Applying these percents to the August credit sales, for example, shows that $96.750 of the $215.000 will be collected in September. $43,000 in October, and $19,350 in November. All merchandise is purchased on credit: 80% of the balance is paid in the month following a purchase, and the remaining 20% is paid in the second month. For example, of the $125,000 August purchases, $100,000 will be paid in September and $25.000 in October Required: Prepare a cash budget for September October, and November Calculation of cash receipts from sales < Prev 10 of 10 !! Next >

just need the rest of the uncollectibles

Answer 1

Date: __/ _Page no:_ Calculation of Uncollectibles - Pattern of collection of sales? - In the month of sale. In the following month of sale In the second month In the third month Uncollectible sales (balance) 25% 45% 20% 100% (i% of Total sales) Month August September October November Total sales $ 215000 $ 250000 375000 $ 400000 $ 1240000 Uncollectible $ 2150 $ 2500 $ 3750 4ooo $ 12400 Total