Question
In: Accounting
Company A is preparing its budget for the third quarter. The following information has been compiled:...
Company A is preparing its budget for the third quarter. The following information has been compiled:
Cash collections $50,000 $40,000 $48,000
Cash payments
Purchases of
inventory 31,000 22,000 18,000
Operating
expenses 12,000 9,000 11,600
Capital
expenditures 13,000 25,000 0
The cash balance at the end of the second quarter is projected to be $4,000. The company is required to maintain cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000. All financing transactions are assumed to take place at the end of the month. Loan balances should be repaid in increments of $5,000 when there is surplus of cash.
What amount of principle should the company repay to the bank at the end of September?
Solutions
Expert Solution
Solution:
|
Cash Budget - Company A For the month of July through September |
||||
| Particulars | July | August | September | Quarter |
| Beginning Cash balance | $4,000.00 | $8,000.00 | $7,000.00 | $4,000.00 |
| Plus: Cash collections | $50,000.00 | $40,000.00 | $48,000.00 | $138,000.00 |
| Total Cash Available | $54,000.00 | $48,000.00 | $55,000.00 | $142,000.00 |
| Cash Payments: | ||||
| Purchase of inventory | $31,000.00 | $22,000.00 | $18,000.00 | $71,000.00 |
| Operating expenses | $12,000.00 | $9,000.00 | $11,600.00 | $32,600.00 |
| Capital expenditure | $13,000.00 | $25,000.00 | $0.00 | $38,000.00 |
| Total Cash Payments | $56,000.00 | $56,000.00 | $29,600.00 | $141,600.00 |
| Ending cash balance before financing | -$2,000.00 | -$8,000.00 | $25,400.00 | $400.00 |
| Financing: | ||||
| Plus: New Borrowings | $10,000.00 | $15,000.00 | $0.00 | $25,000.00 |
| Less: Debt Repayments | $0.00 | $0.00 | $20,000.00 | $20,000.00 |
| Ending cash balance | $8,000.00 | $7,000.00 | $5,400.00 | $5,400.00 |
Therefore company will pay $20,000 principal to the bank at the end of September.
ekkarill92 answered 1 year agoRelated Solutions
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Assets
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Colerain Corporation is a merchandising company that is preparing a budget for the third quarter of...
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COLERAIN CORPORATION
Balance Sheet
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Assets
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$
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Accounts
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146,000
Inventory
72,000
Plant and equipment,
net of depreciation
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Liabilities and Stockholders’ Equity
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payable
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Retained
earnings
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and stockholders’ equity
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Colerain’s managers have...
Colerain Corporation is a merchandising company that is preparing a budget for the third quarter of...
Colerain Corporation is a merchandising company that is
preparing a budget for the third quarter of the calendar year. The
company’s balance sheet as of June 30 is shown below:
COLERAIN CORPORATION
Balance Sheet
June 30
Assets
Cash
$ 95,000
Accounts receivable
141,000
Inventory
67,000
Plant and equipment, net of depreciation
350,000
Total assets
$ 653,000
Liabilities and Shareholders’ Equity
Accounts payable
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Common shares
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Retained earnings
127,000
Total liabilities and shareholders’ equity
$ 653,000
Colerain’s managers have...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
Beech Corporation is a merchandising company that is preparing a
master budget for the third quarter of the calendar year. The
company’s balance sheet as of June 30th is shown below:
Beech Corporation
Balance Sheet
June 30
Assets
Cash
$
74,000
Accounts receivable
143,000
Inventory
73,500
Plant and equipment, net of depreciation
224,000
Total assets
$
514,500
Liabilities and Stockholders’
Equity
Accounts payable
$
85,000
Common stock
310,000
Retained earnings
119,500
Total liabilities and stockholders’ equity
$
514,500
Beech’s managers...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
Beech Corporation is a merchandising company that is preparing a
master budget for the third quarter of the calendar year. The
company’s balance sheet as of June 30th is shown below:
Beech Corporation
Balance Sheet
June 30
Assets
Cash
$
74,000
Accounts receivable
143,000
Inventory
73,500
Plant and equipment, net of depreciation
224,000
Total assets
$
514,500
Liabilities and Stockholders’
Equity
Accounts payable
$
85,000
Common stock
310,000
Retained earnings
119,500
Total liabilities and stockholders’ equity
$
514,500
Beech’s managers...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
Beech Corporation is a
merchandising company that is preparing a master budget for the
third quarter of the calendar year. The company’s balance sheet as
of June 30th is shown below:
Beech Corporation
Balance Sheet
June 30
Assets
Cash
$ 92,000
Accounts
receivable
130,000
Inventory
48,600
Plant and
equipment, net of depreciation
216,000
Total
assets
$ 486,600
Liabilities and Stockholders’ Equity
Accounts
payable
$ 77,000
Common
stock
329,000
Retained
earnings
80,600
Total
liabilities and stockholders’ equity
$ 486,600
Beech’s managers have
made...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
Beech Corporation is a merchandising company that is preparing a
master budget for the third quarter of the calendar year. The
company’s balance sheet as of June 30th is shown below:
Beech Corporation
Balance Sheet
June 30
Assets
Cash
$ 71,000
Accounts receivable
131,000
Inventory
45,500
Plant and equipment, net of depreciation
215,000
Total assets
$ 462,500
Liabilities and Stockholders’ Equity
Accounts payable
$ 76,000
Common stock
307,000
Retained earnings
79,500
Total liabilities and stockholders’ equity
$ 462,500
rev: 05_02_2017_QC_CS-88254...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
Beech Corporation is a
merchandising company that is preparing a master budget for the
third quarter of the calendar year. The company’s balance sheet as
of June 30th is shown below:
Beech Corporation
Balance Sheet
June 30
Assets
Cash
$
70,000
Accounts
receivable
134,000
Inventory
48,300
Plant and
equipment, net of depreciation
212,000
Total
assets
$
464,300
Liabilities and Stockholders’ Equity
Accounts
payable
$
73,000
Common
stock
306,000
Retained
earnings
85,300
Total
liabilities and stockholders’ equity
$
464,300
Beech’s managers...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
Beech Corporation is a merchandising company that is preparing a
master budget for the third quarter of the calendar year. The
company’s balance sheet as of June 30th is shown below:
Beech Corporation
Balance Sheet
June 30
Assets
Cash
$ 90,000
Accounts receivable
136,000
Inventory
62,000
Plant and equipment, net of depreciation
210,000
Total assets
$ 498,000
Liabilities and Stockholders’ Equity
Accounts payable
$ 71,100
Common stock
327,000
Retained earnings
99,900
Total liabilities and stockholders’ equity
$ 498,000
Beech’s managers have made...
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter...
Beech Corporation is a merchandising company that is preparing a
master budget for the third quarter of the calendar year. The
company’s balance sheet as of June 30th is shown below:
Beech Corporation
Balance Sheet
June 30
Assets
Cash
$ 90,000
Accounts receivable
136,000
Inventory
62,000
Plant and equipment, net of depreciation
210,000
Total assets
$ 498,000
Liabilities and Stockholders’ Equity
Accounts payable
$ 71,100
Common stock
327,000
Retained earnings
99,900
Total liabilities and stockholders’ equity
$ 498,000
Beech’s managers have made...
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