Mary and Kay Inc maintains a 75000 minimum cash balance at all times Financing

Mary and kay inc maintains a 75000 minimum cash

This preview shows page 1 - 3 out of 3 pages.

Mary and Kay, Inc. maintains a $75,000 minimum cash balance at all times. Financing is available (and retired) in $1,000 multiples at an 9 percent interest rate, with borrowings taking place at the beginning of the month and repayments occurring at the end of the month. Interest is paid at the time of repaying principal and computed on the portion of principal repaid at that time. Additional data: January February March Sales revenue $600,000 $690,000 $705,000 Merchandise purchases 420,000 450,000 570,000 Cash operating costs 108,000 87,000 150,000 Proceeds from sale of equipment 30,000 Required: 1. Prepare a schedule that discloses the firm’s total cash collections for January through March. 2. Prepare a schedule that discloses the firm’s total cash disbursements for January through March.
Image of page 1
3. Prepare a schedule that summarizes the firm’s financing cash flows for January through March. Prepare a schedule that discloses the firm’s total cash collections for January through March. January February March Collection of accounts receivable $48,000 Collection of January sales 360,000 180,000 Collection of February sales 414,000 207,000 Collection of March sales 423,000 Sale of equipment 30,000 Total cash collections $408,000 $594,000 $660,000 Explanation 1. Schedule of cash collections: Collection of accounts receivable: $240,000 × 20% = $48,000 Collection of January sales ($600,000): 60% in January; 30% in February = $360,000; $180,000 Collection of February sales ($690,000): 60% in February; 30% in March = $414,000; $207,000 Collection of March sales ($705,000): 60% in March; 30% in April = $423,000
Image of page 2
Image of page 3

You've reached the end of your free preview.

Want to read all 3 pages?

  • Spring '14
  • Zeeshan

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors