Prepare a cash budget for the hale company

Assignment Help Financial Accounting

Reference no: EM13333918

The Hale Company is currently working on its cash budget for the coming year. The following information is available:

Projected sales for the coming year:

Month Projected Sales
January $850,000
February 750,000
March 730,000
April 850,000
May 830,000
June 750,000
July 900,000

The collection history of the Hale Company has been as follows:

20% of sales are collected in the month of the sale.
60% of the sales are collected in the month following the sale.
12% of the sales are collected in the 2nd month following the sale.
5% of the sales are collected in the 3rd month following the sale.

The following information regarding costs is available:

The cost of goods sold is 54% of sales
Items for sale are purchased in the month of the sale.
80% of accounts payable are paid in the month following when the cost is incurred.
20% of accounts payable are paid in the 2nd month following when the cost is incurred.
Wages are 28% of sales and are paid currently
Annual general and administrative costs are $1,411,200 and are incurred evenly throughout the year.
Annual property taxes are $14,000 and are paid semiannually in June and October.
A $10,000 cash capital purchase will be made in April.

The beginning cash balance in April is expected to be $47,000. The Hale Company has a policy of maintaining a minimum cash balance of $45,000. The company has an arrangement with a local bank for a line of credit that carries a 10% annual interest rate. If the ending monthly balance falls below $45,000, the company will borrow against the line of credit so that the minimum balance can be maintained. If the company has borrowed against the line of credit and a cash balance is expected to be above $45,000 at the end of a particular month, then repayments will be made bringing the cash balance down to $45,000. Interest on the line of credit is paid monthly. Assume that all line of credit transactions occur on the last day of the month.

Required:
Prepare a cash budget for the Hale Company for the 2nd quarter of the year. Include April, May, June, and a quarter total in your budget.

Reference no: EM13333918

Questions Cloud

What is the surface charge density of the sphere : A charged conducting sphere of radius 18 cm has 1012 electrons removed from its surface. What is the surface charge density of the sphere

Explain the carbocation intermediate in the reaction : Experimental write up without changing our kinetics calculation. Write the structure of another other organic products that might be produced from the carbocation intermediate in this reaction.

Access the coca-cola company 2012 financial statements : Using the web, access The Coca-Cola Company 2012 financial statements (www.thecoca-colacompany.com). Identify and discuss the following aspects of consolidated tax expense disclosed in the financial statements:

Evaluate the integrals using integration by parts : Find the indefinite integral of f(x) and Find the compression x when the energy - Evaluate the integrals using integration by parts.

Prepare a cash budget for the hale company : Prepare a cash budget for the Hale Company for the 2nd quarter of the year. Include April, May, June, and a quarter total in your budget.

What is greenhouse effect-what law of physics can we use : What is the greenhouse effect and what effect does it have on the earth's surface temperature? What would the average surface temperature be without the GH effect? How can we determine what the temperature should have been (what law of physics can we..

Evaluate the volume of hexane : Calculate the volume of hexane that you need at minimum, if you want to extract at least 95% of the total 1,2,4-TCB present in the water sample

How much will stephanie have in her retirement account : In other words, her employer will contribute 50 percent of the amount Stephanie saves. If both Stephanie and her employer continue to do this and she can earn a monthly rate of 0.9 percent

Epidermal cell type is most numerous : Which epidermal cell type is most numerous? and why?

User Account

All Pages