Question

Graham Potato Company has projected sales of $7200 In September, $11,000 in October, $17,200 in November, and $13,200 In December. Of the company's sales, 20 percent are pald for by cash and 80 percent are sold on credit. Experience shows that 40 percent of accounts recelvable are pald In the month after the sale, whle the remalning 60 percent are pald two months after. Determine collections for November and December. Also assume Graham's cash payments for November and December are $14,500 and $7,000, respecively. The beginning cash balance In November is $5,000, which is the desired minimum balance a. Prepare a cash recelpts schedule for November and December. Graham Potato Company Cash Receipts Schedule October September November December 13,200 10,560 2,640 5,504 5,280 13,424 Sales 7,200S 11,000 S 17,200S Credit sales 5,760 8,800 13,760 Cash sales One month after sale Two months after sale 3,440 S 3,520 3.456 0.416 Total cash receipts b. Prepare a cash budget wlth borrowing needed or repayments for November and December. (Negative amounts should be Indicated by e minus sign. Assume the November beginning loan balance Is $0.) Graham Potato Company Cash Budget November December Total cash receipts Total cash payments Net cash flow Beginning cash balance Cumulative cash balance Monthly borrowing (repayment) Ending cash balance Cumulative loan balance 3.424 7,000 20,424 5,000 25,424 (24,916 508 10,416s 14,500 24,916S 5,000 29,916S 24,916 54,832S 24,916S

Answer 1

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