Question

9 The following data relate to the operations of Andros Com Company, a magazine distributor Current assets as of March 31: Cash Accounts receivable S26,000 S90,000 Buildings and equipment (net). S150,000 Accounts payableS102,500 Capital stock... S50,000 $148,000 The gross margin is 25% of sales. a. b. Actual and budgeted sales data: March (actual $200,000 $230,000 May. $240,000 June...$250,000 July260,000 April Sales are 55% for cash and 45% on credit. Credit sales are collected in the month following sale The accounts receivable at March 31 are the result of March credit sales. Each month's ending inventory should equal 20% of the following month's sales budgeted cost of goods sold. 40% of a month's inventory purchases is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable at March 31 are a result of March purchases of inventory Monthly expenses are as follows: commissions, $30,400; rent, $11,000; other expenses (excluding depreciation), 4% of sales. These expenses are paid monthly. Depreciation is $7,000 per month and includes depreciation on new assets. c. d. e, f. g. Equipment costing $10,000 will be purchased for cash in April. j. Management wants to maintain a minimum cash balance of $20,000. The company has arn agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total of $20,000. The interest rate on these loans is 1% per month and for simplicity we will assume the interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter

Answer 1