Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the belowtable.Sales forecastFirst$ 452(figures in $ millions)A. Cash requirementsQuarter in Coming YearSecondThird$ 354$ 350Paymore's labor and administrative expenses are $79 per quarter and interest on long-term debt is $54 per quarter. Paymore's cashbalance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to$350 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they aresold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $350. Onaverage, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter.Prepare a short-term financing plan using the above table.Note: Leave no cells blank. Enter '0' when necessary. Negative amounts should be indicated by a minus sign. Round order,payment, and collection calculations to the nearest whole number. Enter your answers in the Table in millions of dollars, roundedto 2 decimal places.Cash required for operationsInterest on bank loanTotal cash requiredB. Cash raised in quarterLine of creditTotal cash raisedC. Repayments of bank loanD. Addition to cash balancesE. Line of creditFourth$398FirstSecondFollowing YearFirst Quarter$ 398QuarterThirdFourth

Cash Budget is prepared to estimate the cash requirement of the Business Entity in the future…

Prepare a short-term financing plan using the above table. Note: Leave no cells blank. Enter 'O' when necessary. Negative amounts should be indicated by a minus sign. Round order, payment, and collection calculations to the nearest whole number. Enter your answers in the Table in millions of dollars, rounded to 2 decimal places.

Prepare a short-term financing plan using the above table. Note: Leave no cells blank. Enter 'O' when necessary. Negative amounts should be indicated by a minus sign. Round order, payment, and collection calculations to the nearest whole number. Enter your answers in the Table in millions of dollars, rounded to 2 decimal places.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2MC

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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?
Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table. Following Quarter in Coming Year Year First First Second Third Fourth Quarter Sales forecast $420 $342 $346 $394 $394 Paymore's labor and administrative expenses are $75 per quarter and interest on long-term debt is $50 per quarter. Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to $346 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $346. On average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter. Prepare a short-term financing plan using the above table. (Leave no…
Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table. Following Year Quarter in Coming Year Second $362 Third $338 Fourth $386 First First Quarter Sales forecast $374 $386 Paymore's labor and administrative expenses are $67 per quarter and interest on long-term debt is $42 per quarter. Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to $338 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $338. On average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter. Prepare a short-term financing plan using the above table. (Leave no…
Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table. Sales forecast (figures in $ millions) A. Cash requirements First $372 Paymore's labor and administrative expenses are $65 per quarter and interest on long-term debt is $40 per quarter. Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to $100 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $336. On average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter. Prepare a short-term financing plan using the above table. (Leave no cells blank. Enter 'O' when necessary. Negative…
Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table. Quarter in Coming Year Following Year First Second Third Fourth First Quarter Sales forecast $375 $320 $300 $360 $360 Paymore’s labor and administrative expenses are $66 per quarter and interest on long-term debt is $41 per quarter. Paymore’s cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to $300 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $300. On average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter. Prepare a short-term financing plan using…
Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table Sales forecast First $372 Sources of cash Collections on accounts receivable Uses of cash Quarter in Coming Year Second $360 Payments of accounts payable Labor and administrative expenses Third $336 On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $336. Also, two thirds of the quarter's orders are paid for in the current quarter and the remainder is paid in the following quarter. Assuming that Paymore's labor and administrative expenses are $65 per quarter and that interest on long-term debt is $40 per quarter, work out the net cash flow for Paymore for the coming year using the below table. (Do not round intermediate calculations.) Fourth $384 First Following Year First Quarter $384 Quarter Second…
Valley's managers have made the following additional assumptions and estimates: Estimated sales for July and August are $345,000 and $315,000 respectively Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred The company does not plan to buy or sell any plant and…
Valley's managers have made the following additional assumptions and estimates: Estimated sales for July and August are $345,000 and $315,000 respectively Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred The company does not plan to buy or sell any plant and…
Valley's managers have made the following additional assumptions and estimates: Estimated sales for July and August are $345,000 and $315,000 respectively Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred The company does not plan to buy or sell any plant and…
Valley's managers have made the following additional assumptions and estimates: Estimated sales for July and August are $345,000 and $315,000 respectively Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred The company does not plan to buy or sell any plant and…
Valley's managers have made the following additional assumptions and estimates: Estimated sales for July and August are $345,000 and $315,000 respectively Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred The company does not plan to buy or…
Valley's managers have made the following additional assumptions and estimates: Estimated sales for July and August are $345,000 and $315,000 respectively Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred The company does not plan to buy or…