What would be the impact on the cash budget if 30% ( instead of 25%) of credit
Question:
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).
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?
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 |
Expert Answer:
Ans 1 Supporting schedules Collections of credit sales September October November Aug sales 21500030 ... View the full answer
