managerial accounting chapter 9

C D E F G H I 6. During the last week of March, Harlan Stereo's owner approaches the bank for an $80,000 loan to be made on April 1 and 7 repaid on June 30 with annual interest of 12%, for an interest cost of $2,400. The owner plans to increase the store's 8 inventory by $120,000 in April and needs the loan to pay for inventory acquisitions. The bank's loan officer needs more 9 Information about Harlan Stereo's ability to repay the loan and asks the owner to forecast the store's June 30 cash position 10 On April 1, Harlan Stereo is expected to have a 56,000 cash balance. Its budgeted sales, merchandise purchases, and various 11 cash disbursements for the next three months follow. Budgeted Figures April May June Sales $440,000 $600,000 $760,000 Merchandise purchases $420,000 $360,000 $440,000 Cash disbursements Payroll $32,000 $34,000 $36,000 Rent $12,000 $12,000 $12,000 Cash Merchandise Purchases $160,000 $376,000 $372,000 Other cash expenses $128,000 $16,000 $14,000 Repayment of bank loan $80,000 Interest on the bank loan $2.400 *Operations began in March; March Sales were $360,000 and Merchandise purchases were $200,000 The budgeted April merchandise purchases include the inventory Increase. All sales are on account. The company predicts that 25% of credit sales are collected in the month of the sale, 45% in the second month, 20% in the third month, 9% in the fourth month, and the remaining 1x is uncollectible. Applying these percentages to the March credit sales, for example, shows that $90,000 of the $360,000 will be collected in March, $162,000 in April, $72,000 in May, and $32,400 in June. 29 30 35 Required 36 Prepare the Schedule of Cash Collections and the Cash Budget for April, May, and June for Harlan Stereo Show 37 supporting calculations as needed. Check Budgeted cash balance Aril 26.000 MW.10.000luns $72.000 7-9 10-12 DO O S 1. EX Problem in-class