Nestee controller for Mactan Relaters has assembled the following data to assist in the preparation of a cash budget for the third quarter of 2021: Sales- May $100,000 ;June $120,000; July $90,000 ; August $100,000 September $135,000; October $110,000 Each month, 30% of sales are for cash and 70% ore on credit. The collection pattern for credit sales is 20% in the month of sale, 50% in the following month, and 30% in the second month following the sale. Each month the ending inventory exactly equals 50% of the cost of next month's sales. The markup on goods is 25% of cost. Inventory purchases are paid in the month following the purchase. Monthly expenses are as follows: Salaries and wages $10,000; Depreciation $4,000; Utlites $1,000; Other $1,700. Property taxes of $15,000 are due and payable on July 15,2021. Advertising fees of $6,000 must be paid on August 20,2021. A lease on a new storage facility is scheduled to begin on September 2, 2021.Monthly payments are $5,000. The company has a policy to maintain a minimum cash balance of $10,000. If necessary , it will borrow to meet its short term needs. All borrowing is done at the end of the month. All payments on principal and interest are made at the end of a month. The annual interest rate is 9%. The company must borrow in multiples of $1,000. The balance sheet as of June 30, 2021 is as follows: Cash $ 13,550 Accounts Receivable 88,200 Inventory 36,000 Plant and Equipment, net 425,000 Accounts Payable $ 84,000 Ordinary Share Capital 210,000 Retained Earnings 268,750 10.) What is the ending cash balance of September? a. $12,005 b. $17,600 c. $39,205 d. $7,600 11.) How much is the Accounts Receivable at the end of the 3rd quarter? a. $96,600 b. $138,000 c. $75,600 d. $21,000 12.) How much is the Inventory at the end of the 3rd quarter? a. $76,000 b. $94,000 c. $44,000 d. $54,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 4P

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Nestee controller for Mactan Relaters has assembled the following data to assist in the preparation of a cash budget for the third quarter of 2021:

Sales- May $100,000 ;June $120,000; July $90,000 ; August $100,000

September $135,000; October $110,000

Each month, 30% of sales are for cash and 70% ore on credit. The collection pattern for credit sales is 20% in the month of sale, 50% in the following month, and 30% in the second month following the sale.
Each month the ending inventory exactly equals 50% of the cost of next month's sales. The markup on goods is 25% of cost.
Inventory purchases are paid in the month following the purchase.
Monthly expenses are as follows: Salaries and wages $10,000; Depreciation $4,000; Utlites $1,000; Other $1,700.
Property taxes of $15,000 are due and payable on July 15,2021.
Advertising fees of $6,000 must be paid on August 20,2021.
A lease on a new storage facility is scheduled to begin on September 2, 2021.Monthly payments are $5,000.
The company has a policy to maintain a minimum cash balance of $10,000. If necessary , it will borrow to meet its short term needs. All borrowing is done at the end of the month. All payments on principal and interest are made at the end of a month. The annual interest rate is 9%. The company must borrow in multiples of $1,000.
The balance sheet as of June 30, 2021 is as follows:

Cash	$ 13,550
Accounts Receivable	88,200
Inventory	36,000
Plant and Equipment, net	425,000
Accounts Payable		$ 84,000
Ordinary Share Capital		210,000
Retained Earnings		268,750

10.) What is the ending cash balance of September?

a. $12,005

b. $17,600

c. $39,205

d. $7,600

11.) How much is the Accounts Receivable at the end of the 3rd quarter?

a. $96,600

b. $138,000

c. $75,600

d. $21,000

12.) How much is the Inventory at the end of the 3rd quarter?

a. $76,000

b. $94,000

c. $44,000

d. $54,000

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