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purchases will be for cash. The company declares dividends of $20,000
each quarter, payable in the first month of the following quarter.
Other relevant data is given below:
Cash balance as of September 30 $74,000
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. Determ ine any
borrowing that would be needed to maintain the minimum cash balance
of $50,000.
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ACCT 505 Week 6 Case Study Balanced Scorecard Case (700
words Paper)