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74.
Tall Guys Clothing has a 45 day collection period. Sales for the next calendar year are
estimated at $2,100, $1,600, $2,500 and $2,300, respectively, by quarter, starting with the
first quarter of the year. Given this information, which one of the following statements is
correct? Assume a year has 360 days.
75.
Forest Gardens, Inc., has a beginning receivables balance on February 1 of $730. Sales for
February through May are $720, $780, $820, and $850, respectively. The accounts
receivable period is 30 days. What is the amount of the April collections? Assume a year
has 360 days.
76.
Davis and Davis have expected sales of $490, $465, $450, and $570 for the months of
January through April, respectively. The accounts receivable period is 28 days. What is the
accounts receivable balance at the end of March? Assume a year has 360 days.
77.
The Athletic Sports Store has a beginning receivables balance on January 1 of $410. Sales
for January through April are $440, $480, $690, and $720, respectively. The accounts
receivable period is 60 days. How much did the firm collect in the month of April? Assume
a year has 360 days.
78.
Breakwater Aquatics has a 45 day accounts receivable period. The estimated quarterly
sales for this year, starting with the first quarter, are $6,800, $7,100, $8,200, and $6,400,
respectively. What is the accounts receivable balance at the beginning of the third
quarter? Assume a year has 360 days.
79.
The Dog House expects sales of $560, $650, $630, and $610 for the months of May
through August, respectively. The firm collects 20 percent of sales in the month of sale, 70
percent in the month following the month of sale, and 8 percent in the second month
following the month of sale. The remaining 2 percent of sales is never collected. How
much money does the firm expect to collect in the month of August?
80.
The Wire House purchases its inventory one quarter prior to the quarter of sale. The
purchase price is 55 percent of the sales price. The accounts payable period is 45 days.
The accounts payable balance at the beginning of quarter one is $62,000. What is the
amount of the expected disbursements for quarter two given the following expected
quarterly sales?
81.
Nadine's Boutique has a 30 day accounts payable period. The firm has expected quarterly
sales of $1,100, $1,400, $1,600, and $2,100, respectively, for next year. The quarterly cost
of goods sold is equal to 68 percent of the next quarter's sales. The firm has a beginning
accounts payable balance of $550 as of Quarter 1. What is the amount of the projected
cash disbursements for accounts payable for Quarter 3 of the next year? Assume a year
has 360 days.
82.
Kid's Delight expects to sell $8,200 worth of toys in December, $3,700 worth in January,
$4,400 in February, and $6,100 in March. The wholesale cost is 72 percent of the retail
price. The firm has a receivables period of 30 days, a payables period of 60 days, and buys
inventory one month prior to selling it. Which one of the following statements is correct?
83.
As of the beginning of the quarter, Swenson's, Inc. had a cash balance of $460. During the
quarter, the company collected $480 from customers and paid suppliers $360. The
company also paid an interest payment of $20 and a tax payment of $110. In addition, the
company repaid $140 on its long-term debt. What is Callahan's cash balance at the end of
the quarter?
84.
On May 1, your firm had a beginning cash balance of $175. Your sales for April were $430
and your May sales were $480. During May, you had cash expenses of $110 and payments
on your accounts payable of $290. Your accounts receivable period is 30 days. What is
your firm's beginning cash balance on June 1?
85.
The Mish Mash Store has a beginning cash balance of $440 on March 1. The firm has
projected sales of $610 in February, $680 in March, and $740 in April. The cost of goods
sold is equal to 70 percent of sales. Goods are purchased one month prior to the month of
sale. The accounts payable period is 30 days and the accounts receivable period is 10
days. The firm has monthly cash expenses of $125. What is the projected ending cash
balance at the end of March? Assume every month has 30 days.
86.
Fancy Footwear has a line of credit with a local bank in the amount of $80,000. The loan
agreement calls for interest of 7 percent with a compensating balance of 5 percent, which
is based on the total amount borrowed. The compensating balance will be deposited into
an interest-free account. What is the effective interest rate on the loan if the firm needs to
borrow $75,000 for one year to cover operating expenses?
87.
Juno Industrial Supply has a $150,000 line of credit with a 7.5 percent interest rate. The
loan agreement requires a 2 percent compensating balance, which is based on the total
amount borrowed, and which will be held in an interest-free account. What is the effective
interest rate if the firm borrows $90,000 on the line of credit for one year?
88.
Rachel's has a $50,000 line of credit with Uptown Bank. The line of credit calls for an
interest rate of 8 percent and a compensating balance of 4 percent. The compensating
balance is based on the total amount borrowed and will be held in an interest-free
account. What is the effective annual interest rate if the firm borrows $35,000 for one
year?
89.
The Delta Fish Hatchery factors its accounts receivables immediately at a 2 percent
discount. The average collection period is 34 days. Assume that all accounts are collected
in full. What is the effective annual interest rate on this arrangement?
90.
New York Bank provides Food Canning, Inc. a $250,000 line of credit with an interest rate
of 1.75 percent per quarter. The credit line also requires that 1 percent of the unused
portion of the credit line be deposited in a non-interest bearing account as a
compensating balance. Food Canning, Inc.'s short-term investments are paying 1.2 percent
per quarter. What is the effective annual interest rate on this arrangement if the line of
credit goes unused all year? Assume any funds borrowed or invested use compound
interest.
91.
The Sports Store has a $100,000 line of credit with City Bank. The loan agreement
requires that 2 percent of the unused portion of the credit line be deposited in a non-
interest bearing account as a compensating balance. The interest rate on the borrowed
funds is 1.75 percent per quarter. The Sport Store's short-term investments are paying 1.5
percent per quarter. What is the effective annual interest rate on the line of credit if The
Sports Store borrows the entire $100,000 for one year? Assume any funds borrowed or
invested use compound interest.
