Carson Ltd. has prepared the following 2021 projections for its beverage company:SalesMonthCash SalesCredit SalesМay$ 16,000$ 68,000June20,00080,000July18,00074,000August24,00092,000September22,00076,000Receivables have been historically collected at the following rates:• 40% in the month of sale45% in the month following sale15% two months after saleInventory PurchasesMonthPurchase AmountsMay$ 70,000June72,000July74,000August78,000September80,00040% of purchases are paid for in cash in the month of sale, and the balance is paid thefollowing month. General CostsIn addition to purchases, Carson has the following monthly costs:Salaries and wages: $ 8,000• Rent: $4,000General costs are paid in the month incurred.Other InformationCarson plans on declaring and issuing $5,000 in dividends in July, and to purchase newequipment valued at $35,000 in August.Carson has a line of credit of $30,000 that may be drawn upon should cash balancesfall below $0. The interest on the line of credit is 15% annually. All borrowing iseffective at the beginning of the month, and all repayments are made at the end of themonth of repayment. Loans are repaid when sufficient cash is available. Interest ispaid only at the time of repayment of principal. Management does not want to borrowany more cash than is necessary and wants to repay as soon as cash is available.Carson's cash balance on June 30th is $6,000.Required:Prepare the following for the months of July, August, and September:a) Cash collections scheduleb) Cash disbursement schedulec) Cash budget

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Carson Ltd. has prepared the following 2021 projections for its beverage company: Sales Month Cash Sales Credit Sales $ 16,000 20,000 May $ 68,000 June 80,000 July 18,000 74,000 August 24,000 92,000 September 22,000 76,000 Receivables have been historically collected at the following rates: • 40% in the month of sale 45% in the month following sale 15% two months after sale Inventory Purchases Month Purchase Amounts May $ 70,000 June 72,000 July 74,000 August 78,000 September 80,000 40% of purchases are paid for in cash in the month of sale, and the balance is paid the following month.

Carson Ltd. has prepared the following 2021 projections for its beverage company: Sales Month Cash Sales Credit Sales $ 16,000 20,000 May $ 68,000 June 80,000 July 18,000 74,000 August 24,000 92,000 September 22,000 76,000 Receivables have been historically collected at the following rates: • 40% in the month of sale 45% in the month following sale 15% two months after sale Inventory Purchases Month Purchase Amounts May $ 70,000 June 72,000 July 74,000 August 78,000 September 80,000 40% of purchases are paid for in cash in the month of sale, and the balance is paid the following month.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 1PROB

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