(ix) A long-term bond purchased by Pelican Merchandising 2 years ago, with a face value of $450,000 will mature on January 15, 2022. To meet the financial obligations of the business, management has decided to liquidate the investment upon maturity. On that date semi-annual interest computed at a rate of 8%% per annum is also expected to be collected. A compensation payment of $355,000 to a former employee for a back injury sustained in an accident in the business storage facility, not covered by insurance, becomes due and payable on January 25, 2022. (x) (xi) Wages and salaries are expected to be $3,264,000 per annum and will be paid monthly. (xii) The cash balance on March 31, 2022 is expected to be an overdraft of $253,000 Required: (a) The business needs to have a sense of its future cash flows and therefore requires the preparation of the following: • A schedule of budgeted cash collections for trade receivables (sales on account) for each of the months January to March. A schedule of expected cash disbursements for accounts payable (purchases on account) for each of the months January to March. • A cash budget, with a total column, for the quarter ending March 31, 2022, showing the expected cash receipts and payments for each month and the ending cash balance for each of the three months, given that no financing activities took place.
(ix) A long-term bond purchased by Pelican Merchandising 2 years ago, with a face value of $450,000 will mature on January 15, 2022. To meet the financial obligations of the business, management has decided to liquidate the investment upon maturity. On that date semi-annual interest computed at a rate of 8%% per annum is also expected to be collected. A compensation payment of $355,000 to a former employee for a back injury sustained in an accident in the business storage facility, not covered by insurance, becomes due and payable on January 25, 2022. (x) (xi) Wages and salaries are expected to be $3,264,000 per annum and will be paid monthly. (xii) The cash balance on March 31, 2022 is expected to be an overdraft of $253,000 Required: (a) The business needs to have a sense of its future cash flows and therefore requires the preparation of the following: • A schedule of budgeted cash collections for trade receivables (sales on account) for each of the months January to March. A schedule of expected cash disbursements for accounts payable (purchases on account) for each of the months January to March. • A cash budget, with a total column, for the quarter ending March 31, 2022, showing the expected cash receipts and payments for each month and the ending cash balance for each of the three months, given that no financing activities took place.
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 4P
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