6 10 OMB Ltd. 's September balance sheet contains the following information: Cash 1. 2. Management...
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6 10 OMB Ltd. 's September balance sheet contains the following information: Cash 1. 2. Management has designated $30,000 as the firm's minimum monthly cash balance. Other information about the firm and its operations is as follows: Accounts receivable Allowance for doubtful accounts Merchandise inventory 3. 6. $30,000 (dr) 100,800 (de) 2,240 (cr) 21,000 (dr) Sales revenues of $280,000, $336,000, and $250,000 are expected for October, November, and December, respectively. All goods are sold on account. 1 The collection pattern for accounts receivable is 55% in the month of sale, 44% in the month following the month of sale, and 1% uncollectible, which is set up as an allowance. Cost of goods sold is 60% of sales revenues. 4. Management's target ending balance of merchandise inventory is 10% of the current month's sales. 5. All accounts payable for inventory are paid in the month of purchase. Other monthly expenses are $37,800, which includes $2,800 of amortization but does not include bad debt expense, Required a. Prepare a cost of purchases schedule for October and November. 7. Borrowings and investments can only be made in $5,000 increments at the end of a month. Interest is charged at the rate of 10% per year; interest will be earned at the rate of 8% per year. b. Prepare the cash budgets for October and November including the effects of financing (borrowing or investing). 6 10 OMB Ltd. 's September balance sheet contains the following information: Cash 1. 2. Management has designated $30,000 as the firm's minimum monthly cash balance. Other information about the firm and its operations is as follows: Accounts receivable Allowance for doubtful accounts Merchandise inventory 3. 6. $30,000 (dr) 100,800 (de) 2,240 (cr) 21,000 (dr) Sales revenues of $280,000, $336,000, and $250,000 are expected for October, November, and December, respectively. All goods are sold on account. 1 The collection pattern for accounts receivable is 55% in the month of sale, 44% in the month following the month of sale, and 1% uncollectible, which is set up as an allowance. Cost of goods sold is 60% of sales revenues. 4. Management's target ending balance of merchandise inventory is 10% of the current month's sales. 5. All accounts payable for inventory are paid in the month of purchase. Other monthly expenses are $37,800, which includes $2,800 of amortization but does not include bad debt expense, Required a. Prepare a cost of purchases schedule for October and November. 7. Borrowings and investments can only be made in $5,000 increments at the end of a month. Interest is charged at the rate of 10% per year; interest will be earned at the rate of 8% per year. b. Prepare the cash budgets for October and November including the effects of financing (borrowing or investing).
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solution a Ending Merchandise october 336000 x 10 100 Novemba sales OMBLIA Cost of prochases chedule ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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