1. Study Problem #22-6A in your homework and answer the following questions in your own words. YOU ARE NOT BEING ASKED TO PREPARE A REVISED BUDGET; INSTEAD, ANSWER THE QUESTIONS BASED ON CONCEPT AND YOUR UNDERSTANDING OF HOW THE BUDGET NUMBERS ARE INTERRELATED. ASSUME EACH OF THE FOLLOWING QUESTIONS IS AN INDEPENDENT SITUATION:

a. What would be the impact on the cash budget if 30% (instead of 25%) of credit sales is collected in the month of the sale? (Note this is the only change). b. What would be the impact on the cash budget, if 90% (instead of 80%) of the merchandise is paid in the month following the purchase?

Problem 22-6A (50 minutes)

ONEIDA COMPANY
Cash Budget
For September, October, and November
		September	October	November
Beginning balance...............................		$ 5,000	$ 99,250	$ 69,500
Cash receipts
Collection on accounts receivable*....		159,250	249,250	338,100
Receipts from bank loan.....................		100,000	_______	_______
Total cash available.............................		264,250	348,500	407,600
Cash disbursements
Payments on accounts payable**........		100,000	217,000	228,000
Payroll................................................		20,000	22,000	24,000
Rent....................................................		10,000	10,000	10,000
Other expenses...................................		35,000	30,000	20,000
Repayment on bank loan....................				100,000
Interest on bank loan***......................		________	________	3,000
Total cash disbursements...................		165,000	279,000	385,000
	Ending cash balance............................	$ 99,250	$ 69,500	$ 22,600

*** Interest at 12% on $100,000 for 3 months is $3,000.

Supporting schedules

Collections of credit sales*	August	September	October	November
Aug. sales ($215,000)[25%: 45%: 20%: 9%].........	$ 53,750	$ 96,750	$ 43,000	$ 19,350
Sept. sales ($250,000)[25%: 45%: 20%]...............	-	62,500	112,500	50,000
Oct. sales ($375,000)[25%: 45%]..........................	-	-	93,750	168,750
Nov. sales ($400,000)[25%]...................................	-	-	-	100,000
Total............................................................................	$ 53,750	$159,250	$249,250	$338,100

Payments on credit purchases**	August	September	October	November
Aug. purchases ($125,000)(0%: 80%: 20%)................................	$ 0	$100,000	$ 25,000	$ -
Sept. purchases ($240,000)(0%: 80%: 20%)...............................	-	0	192,000	48,000
Oct. purchases ($225,000)(0%: 80%)...........................................	-	-	0	180,000
Nov. purchases ($200,000)(0%)...................................................	-	-	-	0
Total....................................................................................................	$ 0	$100,000	$217,000	$228,000