Question

In: Accounting

The Cash Budget– Extra Credit * Would like to have answer in excel with equations shwoing...

The Cash Budget– Extra Credit

* Would like to have answer in excel with equations shwoing

1.    The financial staff at Exotic Foods Inc., a food importer, wholesaler, and distributor, has estimated the following sales figures for the first half of 2018:

Month

Sales

Other Expenses

January

$100,000

$3,000

February

$120,000

$3,200

March

$150,000

$3,500

April

$180,000

$3,800

May

$150,000

$3,500

June

$120,000

$3,200

July

$150,000

$3,500

August

$180,000

$3,800

Actual November and December 2017 sales were $200,000 and $90,000, respectively. Cash sales are 45% of the total and the rest are on credit. About 70% of credit sales are typically collected one month after the sale and 30% the second month. Monthly inventory purchases represent 50% of the following month’s sales. The firm pays 40% of its inventory purchases in cash and the remainder in the following month. Administrative wages are expected to be 10% of the month’s sales. Commissions to sales associates are estimated to be 15% of collectable sales, but the firm has decided to include a bonus of 5% more if the sales of the current month are higher than the previous one. A major capital expenditure of $40,000 is expected in April and a quarterly dividend of $20,000 will be paid to shareholders in March and June. Monthly long-term debt interest expenses and maintenance expenses are $4,000 and $1,500, respectively. Sales taxes are 5% of quarterly sales and must be paid in January, April, and July, starting in January with $19,000. The firm has an ending cash balance of $20,000 for December 2017.

a)    The firm wants to maintain a minimum cash balance of at least $15,000 with a maximum of $30,000, and will pay interest on its short-term borrowings of 5%. If the firm can earn an average rate of return of 3% on short-term investments, help the financial staff of Exotic Foods Inc. to prepare a cash budget that shows interest payments on borrowed/invested funds. Note that the firm must pay off any short-term loan outstanding before any cash surplus can be invested, and invested funds should be used instead of borrowing when needed.

Solutions

Expert Solution


Related Solutions

For 5 points of extra credit, prepare a graph in Excel that plots the daily price...
For 5 points of extra credit, prepare a graph in Excel that plots the daily price fluctuations (daily closing price) from the day you purchased the stock to the current date. You need to create a graph for only one stock. To find the historical daily prices, Yahoo/Finance has a good tool.
what does a recommendations worksheet look like in a Master Budget created in Excel? I have...
what does a recommendations worksheet look like in a Master Budget created in Excel? I have already created the Assumptions tab, Sales Budget, Collections, Production Budget tabs and now need to provide my impressions and recommendations based on that information. I'm looking for an example of layout and type of content to include in that.
You would like to see whether providing extra time to students on their test allows for...
You would like to see whether providing extra time to students on their test allows for them to achieve a higher grade. In the past, the average mark on this test is 68 percent. You select 25 students from your current class, who were given extra time on the test and see their average grade was 72 minutes (St Dev = 8). What is the appropriate hypothesis test? Why this is the correct test? What is the effect size?
9.Answer with daigrams please. (Extra Credit.) A small sample - the T-distribution) The trees around the...
9.Answer with daigrams please. (Extra Credit.) A small sample - the T-distribution) The trees around the Quincy College parking lot have an average length of 4 inches. The leaf lengths are normally distributed, coming from a population with a standard deviation of 0.6 inches. The trees around the Quincy College parking lot are subject to the stimulating aroma of MBTA exhausts. A sample of 20 leaves was taken from these trees and the average leaf length was found to be...
B Excel #1 Proposal #1 would extend trade credit to some customers that previously have been...
B Excel #1 Proposal #1 would extend trade credit to some customers that previously have been denied credit because they were considered poor risks.   Sales are projected to increase by $120,000 per year if credit is extended to these new customers. Of the new accounts receivable generated, 6% are projected to be uncollectible. Additional collection costs are projected to be 5% of incremental sales, and production and selling costs are projected to be 80% of sales. Your firm expects to...
what does a cash budget look like when starting
what does a cash budget look like when starting
You would like to buy a house that costs $ 350000. You have $50,000 in cash...
You would like to buy a house that costs $ 350000. You have $50,000 in cash that you can put down on the? house, but you need to borrow the rest of the purchase price. The bank is offering you a? 30-year mortgage that requires annual payments and has an interest rate of 8% per year. You can afford to pay only $25,320 per year. The bank agrees to allow you to pay this amount each? year, yet still borrow...
You would like to buy a house that costs $350,000. You have $50,000 in cash that...
You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering you a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. You can afford to pay only $23,500 per year. The bank agrees to allow you to pay this amount each year, yet still borrow $300,000....
You would like to buy a house that costs $350,000. You have $50,000 in cash that...
You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering you a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. You can afford to pay only $23,500 per year. The bank agrees to allow you to pay this amount each year, yet still borrow $300,000....
You would like to buy a house that costs $350,000. You have $50,000 in cash that...
You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on the​ house, but you need to borrow the rest of the purchase price. The bank is offering a​ 30-year mortgage that requires annual payments and has an interest rate of 7% per year. You can afford to pay only $23,500 per year. The bank agrees to allow you to pay this amount each​ year, yet still borrow $300,000. At...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT