Question $1$: choose the correct answer:

Day Activity Cash Effects

$0$ Acquire inventory None

$45$ Pay for Inventory $-$$$2000$

$60$ Sell Inventory on Credit None

$120$ Collect on Sales $+$$$2800$

Required: Compute the following:

The Operating Cycle

Which is the sum of Inventory Period and Accounts Receivable Period $=$

Alternatively

Operating cycle $=$ Accounts Payable period $+$ Cash cycle $=$

Cash Cycle $=$

Question $2$:

$$ Inventory:

$$ Beginning $=300,000$

$$ Ending $=500,000$

$$ Accounts Receivable:

$$ Beginning $=260,000$

$$ Ending $=300,000$

$$ Accounts Payable:

$$ Beginning $=250,000$

$$ Ending $=200,000$

$$ Net sales $=2,000,000$

$$ Cost of Goods sold $=1,200,000$

Required: Compute the following:

$$ Inventory period

$$ Average inventory $=($Beginning $+$Ending$)/2=$

$$ Inventory turnover $=$ COGS $/$ Average inventory $=$ times

$$ Inventory period $=365/$ Inventory turnover $=$ days

$$ Receivables period

$$ Average receivables $=($Beginning $+$Ending$)/2=$

$$ Receivables turnover $=$ Net sales $/$ Average receivables $=$ times

$$ Receivables period $=365/$ Receivables turnover $=$ days

$$ Operating cycle $=$ Inventory period $+$ Receivables period $=$ days

$$ Payables Period

$$ Average payables $=($Beginning $+$Ending$)/2=$

$$ Payables turnover $=$ COGS $/$ Average payables $=$ times

$$ Payables period $=365/$ Payables turnover $=$ days

$$ Cash Cycle $=$ Operating cycle $$ Payables period $=$ days

Question $3$:

$$ Pet Treats Inc. specializes in gourmet pet treats and receives all income from sales

$$ Sales estimates $($in millions$)$

$$ Q$1=700$; Q$2=600$; Q$3=800$; Q$4=900$; Q$1$ next year $=1000$

$$ Accounts receivable

$$ Beginning receivables $=$ $$300$

$$ Average collection period $=30$ days

$$ Accounts payable

$$ Purchases $=50\%$ of next quarter$$s sales

$$ Beginning payables $=200$

$$ Accounts payable period is $45$ days

$$ Other expenses

$$ Wages, taxes, and other expense are $30\%$ of sales

$$ Interest and dividend payments are $$60$

$$ A major capital expenditure of $$350$ is expected in the second quarter

$$ The initial cash balance is $$90$ and the company maintains a minimum balance of $$60$

Required: prepare the cash budget.