ACCT 505 Week 6 Quiz Segment Reporting and Relevant Costs for Decisions
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Inventory balance as of September 30 $ 112,000 Merchandise purchases for September $ 200,000 The company maintains a minimum cash balance of at least $ 50,000 at the end of each month . All borrowing is done at the beginning of a month ; any repayments are made at the end of a month . The company has an agreement with a bank that allows the company to borrow the exact amount needed at the beginning of each month . The interest rate on these loans is 1 % per month and for simplicity we will assume that interest is not compounded . At the end of the quarter , the company will pay the bank all of the accrued interest on the loan and as much of the loan as possible while still retaining at least $ 50,000 in cash . Required : Prepare a cash budget for the three-month period ending December 31 . Include the following detailed budgets : 1 . a . A sales budget , by month and in total . b . A schedule of expected cash collections from sales , by month and in total . c . A merchandise purchases budget in units and in dollars . Show the budget by month and in total . d . A schedule of expected cash disbursements for merchandise purchases , by month and in total . 2 . A cash budget . Show the budget by month and in total . Determine any borrowing that would be needed to maintain the minimum cash balance of $ 50,000 . ================================================
ACCT 505 Week 6 Quiz Segment Reporting and Relevant Costs for Decisions
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