The beginning cash balance is $18,000. Sales are forecasted at $860,000 of which 80% will be on account. Seventy percent of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $475,000. Accounts Receivable from previous accounting periods totaling $11,300 will be collected in the current year. The company is required to make a $14,000 loan payment and an annual interest payment on the last day of every year. The loan balance as of the beginning of the year is $95,000, and the annual interest rate is 8%.

The beginning cash balance is $18,000. Sales are forecasted at $860,000 of which 80% will be on account. Seventy percent of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $475,000. Accounts Receivable from previous accounting periods totaling $11,300 will be collected in the current year. The company is required to make a $14,000 loan payment and an annual interest payment on the last day of every year. The loan balance as of the beginning of the year is $95,000, and the annual interest rate is 8%.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 1PROB

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Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is collected in the month of sale, 25% is collected the month after the sale, and 5% is collected the second month after the sale. How much cash will be collected in August if sales are estimated as $75,000 in June, $65,000 in July, and $90,000 in August?
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