1. What is the amount of the repayment of bank loan and the I nterest on bank lo

Question

1. What is the amount of the repayment of bank loan and the I nterest on bank loan
2. What is the amount of the interest on short-term bank loan?
3. What is the net income amount?

4. What are the amounts for the cash, common stock, and retained earnings? "We really need to get this new material-handling equipment In operalioll just unlcl hope we can finance It largely with cash and marketable securties, but if necessary we can get a short-term loan down at MetroBank." This statement by Beth Davies-Lowry, president of Global Electronics Company concluded a meeting she had called with the firm's top management. Global is a small, rapidly growing wholesaler of consumer electronic products. The firm's main product lines are small kitchen appliances and power tools. Marcia Wilcox, Global Electronics' general manager of marketing, has recently completed a sales forecast. She belleves the company's sales during the flrst quarter of 20x1 wll Increase by 10 percent each month over the previous month's sales. Then Wilcox expects sales to remaln constant for several months. Global's projected balance sheet as of December 31, 20x0 Is as follows: Cash Accounts recelvable Marketable securities Inventory $ 70,000 540,000 30,000 308,000 Bulldings and equipment (net of accumulated depreclation)1,252,000 Total assets $2,200,000 Accounts payable Bond interest payable Property taxes payable Bonds payable (10%, due in 20x6) Common stock Retained earnings $ 352.800 25,000 7.200 600,000 1,000,000 215,000 Total Ilablities and stockholders equity $2.200,000 Jack Hanson, the assistant controller. Is now preparing a monthly budget for the first quarter of 20x1. In the process, the following Information has been accumulated: 1. Projected sales for December of 20xO are $800.000 Credit sales typically are 75 percent of total sales Global's credit experience Indicates that 10 percent of the credit sales are collected during the month of sale, and the remalnder are collected during the following month account, and 40 percent of each month's purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next months projected cost of goods sold 3. Hanson has estimated that Global's other monthly expenses will be as follows

Explanation / Answer

I am just answering your queries here:

1. Repayment of bank loan would be of the loan taken i.e. $ 200000 in March, Also the proceeds from the bank loan would be $ 200000 as shown below

2. Interest would be $ 200000 x 10% x 1/4 = $ 5000

3. When you deduct the interest income in the income statement in the last coloumn you left blank you will get net income of $ 321312 which is correct

4. Cash will be $ 59188, retained earnings would be $ 436312 and common stock would be $ 1000000

Please appreicate the efforts and give a positive rating. Thanks

Particulars Amount Projected Cash $ 70000 Less: Min Cash Balance $ 50000 Cash Available for Equipment $ 20000 Sales from Marketable Securities $ 30000 Cash Available $ 50000 Less: Cost of Equipment ($20000) Required Borrowing $ 200000

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