W7_CompProblems - Week 7 Short-Term Funding and Management CHAPTER 16 SHORT-TERM FINANCIAL PLANNING Solutions to Questions and Problems 11 The sales

W7_CompProblems - Week 7 Short-Term Funding and Management...

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Week 7 - Short-Term Funding and Management CHAPTER 16 SHORT-TERM FINANCIAL PLANNING Solutions to Questions and Problems 11. The sales collections each month will be: Sales collections = .35(current month sales) + .60(previous month sales) Given this collection, the cash budget will be: April May June Beginning cash balance $105,000 $153,000 $250,950 Cash receipts Cash collections from credit sales 334,300 360,250 360,450 Total cash available $439,300 $513,250 $611,400 Cash disbursements Purchases $167,000 $175,000 $163,000 Wages, taxes, and expenses 79,300 74,800 103,500 Interest 9,000 9,000 9,000 Equipment purchases 31,000 3,500 143,000 Total cash disbursements $286,300 $262,300 $418,500 Ending cash balance $153,000 $250,950 $192,900 12. a. 45-day collection period implies all receivables outstanding from previous quarter are collected in the current quarter, and (90-45)/90 = 1/2 of current sales are collected. Q1 Q2 Q3 Q4 Beginning receivables $3,700 $4,050 $4,900 $4,600 Sales 8,100 9,800 9,200 7,600 Cash collections –7,750 –8,950 –9,500 –8,400 Ending receivables $4,050 $4,900 $4,600 $3,800
Week 7 - Short-Term Funding and Management b. 60-day collection period implies all receivables outstanding from previous quarter are collected in the current quarter, and (90-60)/90 = 1/3 of current sales are collected.

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