Pharoah Company expects to have a cash balance of $64,800 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017. Collections from customers: January $89,800, February $164,800. Payments to suppliers: January $58,800, February $93,800. Wages: January $30,530, February $40,530. Wages are paid in the month they are incurred. Administrative expenses: January $21,530, February $24,530. These costs include depreciation of $1,000 per month. All 1. 2. 3. 4. other costs are paid as incurred. Selling expenses: January $15,530, February $20,530. These costs are exclusive of depreciation. They are paid as incurred. Sales of short-term investments in January are expected to realize $12,530 in cash. Pharoah Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $38,800. 5. 6.

Pharoah Company expects to have a cash balance of $64,800 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017. Collections from customers: January $89,800, February $164,800. Payments to suppliers: January $58,800, February $93,800. Wages: January $30,530, February $40,530. Wages are paid in the month they are incurred. Administrative expenses: January $21,530, February $24,530. These costs include depreciation of $1,000 per month. All 1. 2. 3. 4. other costs are paid as incurred. Selling expenses: January $15,530, February $20,530. These costs are exclusive of depreciation. They are paid as incurred. Sales of short-term investments in January are expected to realize $12,530 in cash. Pharoah Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $38,800. 5. 6.

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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