Chapter 18 Assignment Module 11

Problem 1

Saunders Corp. has a book net worth of $13,205. Long-term debt is $8,200. Net working capital, other than cash, is $3,205. Fixed assets are $17,380 and current liabilities are $1,630.

How much cash does the company have?

What is the value of the current assets?

Problem 2

Consider the following financial statement information for the Schwertzec Corporation:

Item

Beginning

Ending

Inventory

$

10,583

$

12,412

Accounts receivable

5,130

5,340

Accounts payable

7,205

7,630

Credit sales

$

97,381

Cost of goods sold

69,382

Calculate the operating and cash cycles.

Problem 3

Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2012:

April

May

June

Credit sales

$

312,000

$

291,200

$

350,400

Credit purchases

118,240

141,040

166,800

Cash disbursements

Wages, taxes, and expenses

43,040

10,800

62,640

Interest

10,480

10,480

10,480

Equipment purchases

74,000

135,000

0

The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase.

In March 2012, credit sales were $196,000 and credit purchases were $134,400. Using this information, complete the following cash budget:

April

May

June

Beginning cash balance

$

112,000

$

$

Cash receipts

Cash collections from credit sales

Total cash available

$

$

$

Cash disbursements

Purchases

$

$

$

Wages, taxes, and expenses

Interest

Equipment purchases

Total cash disbursements

$

$

$

Ending cash balance

$

$

$