Please kindly answer all questions, it\'s all related to one question. Informati
ID: 2800350 • Letter: P
Question
Please kindly answer all questions, it's all related to one question.
Information Question 1 (1 point) Using the following information based on expected sales to forecast the monthly cash collections, accounts receivable balance, monthly cash disbursements, net cash flows, and cash surplus / deficit at the end of each month in the fourth quarter of 2017 (October-December 2017). Do not allow your firm to have a cash balance below the minimum cash balance and only borrow what you need. ALL SALES ARE MADE ON CREDIT What is the firm's accounts receivable turnover? Question 2 (2 points) What is the firm's accounts receivable period? a. In September 2017, sales were $50,000. Question 3 (2 points) b. The firm's total sales in 2016 were $2,028,000. The firm's accounts receivable balance on December 31, 2015 was $35,000. The firm's accounts receivable balance on December 31, W 2016 was $65,000. What is the frm's accounts receivable balance at the beginning of October 2017 Question 4 (1 point) c. Accounts payable are 60% of sales d. Operating expenses are 10% of sales e. The firm plans to purchase equipment in October costing $125,000 f. Beginning Cash Balance in October= $25,000 8. Minimum Cash Balance $5,000 What is the firm's total cash collections for the month of October 2017? h, Assume there is an annual interest rate of 18% on short term debt and that the firm starts with no short term borrowing i. Sales are expected to be $40,000 for October 2017, $400,000 for November 2017, and $100,000 for December 2017.Explanation / Answer
1. Accounts receivable turnover = Net annual credit sales/average accounts receivables
= 2,028,000/(35000+65000)/2
= 2,028,000/50,000
= 40.56
2. Accounts receivable period = 365 days in a year/40.56 = 9.00 days
3. Daily sales in September = 50,000/30
Thus 9 = AR/(50,000/30)
or AR = 9*50,000/30 = $15,000
Thus accounts receivable balance at beginning of October = 15,000
4. Cash collections in October for September sales = 15,000
Sales of October = 40,000. AR at the end of October is computed using the formula: 9 = AR/(40,000/30)
or AR = 9*40,000/30 = 12,000. Thus collection in October for October sales = 40,000-12,000 = 28,000
Total collection = 15,000+28,000
= 43,000