3) The following information pertains to Amigo Corporation: Month Sales Purchases ...
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3) The following information pertains to Amigo Corporation:
Month Sales Purchases
July $30,000 $10,000
August 34,000 12,000
September 38,000 14,000
October 42,000 16,000
November 48,000 18,000
December 60,000 20,000
Cash is collected from customers in the following manner:
Month of sale 40%
Month following sale 40%
Two months following sale 10%
Uncollectible Accounts 10%
60% of purchases are paid for in cash in the month of purchase, and the other 40% is paid the following month.
Required: Complete the cash budget (no discounts) for the 4th quarter.
October November December
Beginning Balance: $10,000
Cash Collections from:
August
September
October
November
December
--------------- --------------- -----------------
Total Cash Collections
Total Cash Available
Cash Payments from:
September
October
November
December
-------------- ---------------- -------------------
Total Cash Payments
Ending Cash Balance
Amigo has $50,000 principal loan balance and needs to pay it, but also needs to keep a $10,000 minimum balance. What month is the earliest that Amigo can pay off this loan while keeping the minimum cash balance? ___________________
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