Problem 22-6A (50 minutes) ONEIDA COMPANY Cash Budget For September, October, an
ID: 2491278 • Letter: P
Question
Problem 22-6A (50 minutes)
ONEIDA COMPANY
Cash Budget
For September, October, and November
September
October
November
Beginning balance...............................
$ 5,000
$ 99,250
$ 69,500
Cash receipts
Collection on accounts receivable*....
159,250
249,250
338,100
Receipts from bank loan.....................
100,000
_______
_______
Total cash available.............................
264,250
348,500
407,600
Cash disbursements
Payments on accounts payable**........
100,000
217,000
228,000
Payroll................................................
20,000
22,000
24,000
Rent....................................................
10,000
10,000
10,000
Other expenses...................................
35,000
30,000
20,000
Repayment on bank loan....................
100,000
Interest on bank loan***......................
________
________
3,000
Total cash disbursements...................
165,000
279,000
385,000
Ending cash balance............................
$ 99,250
$ 69,500
$ 22,600
*** Interest at 12% on $100,000 for 3 months is $3,000.
Supporting schedules
Collections of credit sales*
August
September
October
November
Aug. sales ($215,000)—[25%: 45%: 20%: 9%].........
$ 53,750
$ 96,750
$ 43,000
$ 19,350
Sept. sales ($250,000)—[25%: 45%: 20%]...............
-
62,500
112,500
50,000
Oct. sales ($375,000)—[25%: 45%]..........................
-
-
93,750
168,750
Nov. sales ($400,000)—[25%]...................................
-
-
-
100,000
Total............................................................................
$ 53,750
$159,250
$249,250
$338,100
Payments on credit purchases**
August
September
October
November
Aug. purchases ($125,000)—(0%: 80%: 20%)................................
$ 0
$100,000
$ 25,000
$ -
Sept. purchases ($240,000)—(0%: 80%: 20%)...............................
-
0
192,000
48,000
Oct. purchases ($225,000)—(0%: 80%)...........................................
-
-
0
180,000
Nov. purchases ($200,000)—(0%)...................................................
-
-
-
0
Total....................................................................................................
$ 0
$100,000
$217,000
$228,000
ANSWER THE FOLLOWING QUESTION:
What would be the impact on the cash budget if 30% ( instead of 25%) of credit sales is collected in the month of the sale? (Note this is the only change).
What would be the impact on the cash budget, if 90% ( instead of 80%) of the merchandise is paid in the month following the purchase?
ONEIDA COMPANY
Cash Budget
For September, October, and November
September
October
November
Beginning balance...............................
$ 5,000
$ 99,250
$ 69,500
Cash receipts
Collection on accounts receivable*....
159,250
249,250
338,100
Receipts from bank loan.....................
100,000
_______
_______
Total cash available.............................
264,250
348,500
407,600
Cash disbursements
Payments on accounts payable**........
100,000
217,000
228,000
Payroll................................................
20,000
22,000
24,000
Rent....................................................
10,000
10,000
10,000
Other expenses...................................
35,000
30,000
20,000
Repayment on bank loan....................
100,000
Interest on bank loan***......................
________
________
3,000
Total cash disbursements...................
165,000
279,000
385,000
Ending cash balance............................
$ 99,250
$ 69,500
$ 22,600
Explanation / Answer
Ans 1 Supporting schedules Collections of credit sales* September October November Aug. sales ($215,000)—[30%: 45%: 20%: 9%]......... 96750 43000 19350 Sept. sales ($250,000)—[30%: 45%: 20%]............... 75,000 112,500 50,000 Oct. sales ($375,000)—[30%: 45%].......................... - 112,500 168,750 Nov. sales ($400,000)—[30%]................................... - - 120000 Total............................................................................ $171,750 $268,000 $358,100 Cash Budget For September, October, and November September October November Beginning balance............................... 5000 111750 100750 Cash receipts Collection on accounts receivable*.... 171,750 268,000 358,100 Receipt from bank Loan 100,000 Total cash available............................. 276,750 379,750 458,850 Cash disbursements Payments on accounts payable**........ 100,000 217,000 228,000 Payroll................................................ 20,000 22,000 24,000 Rent.................................................... 10,000 10,000 10,000 Other expenses................................... 35,000 30,000 20,000 Repayment on bank loan.................... 100,000 Interest Payment 3,000 Total cash disbursements................... 165,000 279,000 385,000 Ending cash balance 111,750 100,750 73,850 After paying Bank loan the cash surplus is $73850. So company has enough cash surplus Ans 2 Payments on credit purchases** September October November Aug. purchases ($125,000)—(0%: 90%: 10%)................................ $112,500 $12,500 $ - Sept. purchases ($240,000)—(0%: 90%: 10%)............................... 0 216,000 24,000 Oct. purchases ($225,000)—(0%: 90%)........................................... - 0 202500 Nov. purchases ($200,000)—(0%)................................................... - - 0 Total.................................................................................................... $112,500 $228,500 $226,500 Cash Budget For September, October, and November September October November Beginning balance............................... 5000 86750 45500 Cash receipts Collection on accounts receivable 159,250 249,250 338,100 Receipt from bank Loan 100,000 Total cash available............................. 264,250 336,000 383,600 Cash disbursements Payments on accounts payable 112,500 228,500 226,500 Payroll................................................ 20,000 22,000 24,000 Rent.................................................... 10,000 10,000 10,000 Other expenses................................... 35,000 30,000 20,000 Repayment on bank loan.................... 100,000 Interest on Bank Loan 3,000 Total cash disbursements................... 177,500 290,500 383,500 Ending cash balance 86,750 45,500 100 After paying bank loan and interest the company is left with very less cash surplus of $100, which is not a good sign
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