
B-310 SOLUTIONS
11. The sales collections each month will be:
Sales collections = .35(current month sales) + .60(previous month sales)
Given this collection, the cash budget will be:
April May June
Beginning cash balance $140,000 $101,600 $104,100
Cash receipts
Cash collections from
credit sales 283,500 361,400 371,700
Total cash available $423,500 463,000 475,800
Cash disbursements
Purchases $168,000 $147,800 $176,300
Wages, taxes, and expenses 53,800 51,000 78,300
Interest 13,100 13,100 13,100
Equipment purchases 87,000 147,000 0
Total cash disbursements $321,900 $358,900 $267,700
Ending cash balance $101,600 $104,100 $208,100
12. Item
Source/Use Amount
Cash Source $1,100
Accounts receivable Use –$4,300
Inventories Use –$3,670
Property, plant, and equipment Use –$12,720
Accounts payable Source $2,600
Accrued expenses Use –$810
Long-term debt Source $3,000
Common stock Source $5,000
Accumulated retained earnings Source $1,610
Intermediate
13. a. If you borrow $50,000,000 for one month, you will pay interest of:
Interest = $50,000,000(.0064)
Interest = $320,000
However, with the compensating balance, you will only get the use of:
Amount received = $50,000,000 – 50,000,000(.05)
Amount received = $47,500,000
This means the periodic interest rate is:
Periodic interest = $320,000/$47,500,000