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Collections from january credit sales 01504220000

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Collections from January credit sales = (0.15)(0.4)($220,000)Collections from January credit sales = $13,200Therefore, Expected cash receipts, March = $150,000 + $50,000 + $28,800 + $13,200 = $242,000240.Which of the following isnota reason for creating a cash budget?a.To identify periods of excessive cash and begin investigating possible investments for those funds.b.To ensure that liquidity is maintained.c.To sum up all of the other budgets.d.To identify periods of cash shortages and begin finding sources of funds.> A cash budget is a plan to ensure that liquidity is maintained. While creating the cash budget, the firm will identify periods of excessand shortage of funds and can plan accordingly. The cash budget does not sum up the other budgets; the master budget does this.241.Myers Company uses a calendar-year and prepares a cash budget for each month of the year. Which one of the following itemsshould be considered when developing July's cash budget?a.Recognition that 0.5% of the July sales on account will be uncollectible.b.Quarterly cash dividends scheduled to be declared on July 15 and paid on August 6 to shareholders of record as of July 25.c.Property taxes levied in the last calendar year scheduled to be paid quarterly in the coming year during the last month of eachcalendar quarter.d.Federal income tax and social security tax withheld from employee's June paychecks to be remitted to the Internal RevenueService in July.> When preparing a cash budget for the following month, those cash items that are to be received or made payable in the followingmonth should be only those items included in the cash budget. In this problem, the only item that will affect cash in the month of Julyare those Federal income and social security taxes withheld from employee's paychecks in June that will be required to be paid in July.242.All of the following are part of a capital investment budget for a company using GAAPexcept:a.factory machine purchase price.b.cost of disposing of the old machine being replaced.c.installation of the factory machine.d.research and development costs.> For a company using GAAP, research and development costs are period costs that must be expensed in the period incurred and aretherefore not part of a capital budget.243.What is the significance of financial forecasts in relation to debt covenants?
a.A debt covenant does not have to be adhered to so long as the company is profitable.b.Providing a detailed financial forecast assures that debt covenants are being met no matter the results.c.Financial forecasts provide a basis for creditors to gain comfort that debt covenants will be met.d.Financial forecasts play no role in determining the probable adherence to debt covenants.> Debt covenants are clauses in debt contracts that organizations must meet to be in compliance with lender requirements. Financialforecasts are often used in predicting whether performance-related debt covenants will be met.

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Term
Spring
Professor
N/A
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Test, production manager, Card Co

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