Reference no: EM133020927
Question - Company B has entered into the following transactions for the next six months
The board of the company wants to determine the short-term working capital funding needs of the company. The company has approached a bank to negotiate a line of credit.
This is a new venture with $10,000 of seed cash or opening cash.
Monthly sales are expected to be $50,000
The accounts receivable terms are 50% the month after sale and 50% in the second month after sale
Variable costs of sales are 40% and are paid the month following sale. The company operates under a just in time inventory system
Labor costs are 20% of sales and are paid monthly when the sale takes place
Overhead costs are 10% of sales and are paid in the following month
Debt servicing costs include the repayment of a loan of $15,000 and interest of $3,000 every 6 months starting in month 6.
The company will buy equipment for $600,000 in month 1 with $300,000 funded by long-term debt.
The company expects to obtain further long-term funding of $300,000 from the owners but not until month 3 and it needs to start production in month 1
Taxes of $12,000 will be deferred to month 12
Dividends of $5,000 will be paid in months 3 and 6 to the owners
Required -
1. Prepare a monthly cash budget?
2. How much is required to finance the business and when should the company pay it back?
|
Do you agree with the accountant suggestion
: An outside supplier has offered to provide Part X at a price of $54 per unit. Do you agree with the accountant's suggestion? Why
|
|
How many shares must be sold
: The share currently sells for $8.00 and there are 150 million shares outstanding. How many shares must be sold if the subscription price is $7.50
|
|
What is the value of Goldman offer
: Your alternative to this investment is an investment that will generate a 5.7% annually. What is the value of Goldman offer
|
|
What is the income tax result for martin
: The surgery is unsuccessful, and after Cody's death, Martin sells the stock for $800,000. What is the income tax result for Martin
|
|
Prepare a monthly cash budget
: The company will buy equipment for $600,000 in month 1 with $300,000 funded by long-term debt. Prepare a monthly cash budget
|
|
What amount of cash was received on the sale of accounts
: The finance charge is 3%, and 5% was retained to cover sales discounts, What amount of cash was received on the sale of accounts receivable
|
|
How much is the balance of allowance for impairment loss
: How much is the balance of allowance for impairment loss on December 31, 2023 immediately after impairment testing
|
|
Discuss adequacy of capital for retirement
: They have a car ($30,000), home contents ($20,000) and savings ($20,000). Discuss adequacy of capital for retirement and show calculations
|
|
How much is forward contract debited or credited
: Irving plc purchases some inventory from Durant SE for EUR 1 million on 7/1/21. How much is forward contract debited or credited on 7/1/21
|