The following data relate to the operations of Picanuy Corporation, a wholesale
ID: 2421933 • Letter: T
Question
The following data relate to the operations of Picanuy Corporation, a wholesale distributor of consumer goods:
Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales.
One-quarter of a month’s inventory purchases is paid for in the month of purchase; the other three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory.
Monthly expenses are as follows: commissions, $12,760; rent, $1,400; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $3,160 for the quarter and includes depreciation on new assets acquired during the quarter.
Management would like to maintain a minimum cash balance of $5,000 at the end of each month. The company has an 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 loan balance of $50,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that 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.
Complete the following:
Complete the following:
Complete the following cash budget: (Borrow and repay in increments of $1,000. Cash deficiency, repayments and interest should be indicated by a minus sign. Round your answers to 2 decimal places.)
Prepare an absorption costing income statement for the quarter ended March 31.
Prepare a balance sheet as of March 31.
Prepare a balance sheet as of March 31.
Prepare a balance sheet as of March 31.
Prepare a balance sheet as of March 31.
The following data relate to the operations of Picanuy Corporation, a wholesale distributor of consumer goods:
Explanation / Answer
1.
Expected cash collections:
January
February
March
Quarter
Cash sales
$30,760
81900×0.40 = $32,760
89100×0.40 = $35,640
$99,160
Credit sales
$40,020
76900×0.60 = $46,140
81900×0.60 = $49,140
$135,300
Total collection
$70,780
$78,900
$84,780
$234,460
January
February
March
Quarter
Cash sales
$30,760
81900×0.40 = $32,760
89100×0.40 = $35,640
$99,160
Credit sales
$40,020
76900×0.60 = $46,140
81900×0.60 = $49,140
$135,300
Total collection
$70,780
$78,900
$84,780
$234,460
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