Reference no: EM133175387
Question - Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl's Doll Shop. Business has been good, but Koehl frequently runs out of cash. This has necessitated late payment on certain orders, which is beginning to cause a problem with suppliers. Koehl plans to borrow from the bank to have cash ready as needed, but first she needs a forecast of how much she should borrow. Accordingly, she has asked you to prepare a cash budget for the critical period around Christmas, when needs will be especially high. Sales are made on a cash basis only. Koehl's purchases must be paid for during the following month. Koehl pays herself a salary of $4,800 per month, and the rent is $2,000 per month. In addition, she must make a tax payment of $12,000 in December. The current cash on hand (on December 1) is $400, but Koehl has agreed to maintain an average bank balance of $6,000-this is her target cash balance. (Disregard the amount in the cash register, which is insignificant because Koehl keeps only a small amount on hand in order to lessen the chances of robbery.)
The estimated sales and purchases for December, January, and February are shown below. Purchases during November amounted to $140,000.
Month/ Sales/ Purchases
December $160,000 40,000
January $40,000 40,000
February $60,000 40,000
Required -
a. Prepare a cash budget for December, January, and February.
b. Suppose that Koehl starts selling on a credit basis on December 1, giving customers 30 days to pay. All customers accept these terms, and all other facts in the problem are unchanged. What would the company's loan requirements be at the end of December in this case?
|
Georgetown festival 2021-a festival for everyone
: First held in 2010 in honour of the city's designation as a UNESCO World Heritage Site, George Town Festival returns for its 12th edition this year, reimagined
|
|
Types of financial and management goals
: Explain what types of financial and management goals Medi-Supply might have as the company moves forward to look for investors.
|
|
Donald Kirkpatrick Four level Evaluation Model
: Donald Kirkpatrick's Four level Evaluation Model, devised in the 1970s and a standard tool in training circles evaluates the value and limitations of the model
|
|
Why is it important for a health care professional
: Why is it important for a health care professional to understand that they normally make firm, lasting assumptions about others, including their patients
|
|
What would the company loan requirements be
: Suppose that Koehl starts selling on a credit basis on December 1, giving customers 30 days to pay. What would the company loan requirements be
|
|
Age Discrimination in Employment Act
: Read "Selected List of Pending and Resolved Cases Under the Age Discrimination in Employment Act (ADEA)."
|
|
Discuss the accounting treatment for the transactions
: The buildings had originally cost $10 million on 1 June 2014 - Discuss the accounting treatment for the above transactions
|
|
What is the nature of water transportation
: What is the nature of water transportation and trace the developmental importance of the mode.
|
|
What is the optimal manufacturing strategy
: A furniture company produces 5 different products (A,B, C, D, and E). Each product requires certain amount of linear wood, glue, stain, and production hours.
|