70.2K

Verified Solution

Link Copied!

Given the following information, how much of a line of credit is appropriate? (Jackie's Toy Manufacturer 2005 Cash Budget for SEPT NOV in $1,000,000s). Thirty percent of sales are for cash and the balance is collected the month following the sales. Seventy percent of the purchases are for cash and the balance is paid the month following the purchase. The required balance is 50.

Sales 400 500 800 1,000

Purchases 250 375 500 600

AUG SEPT OCT NOV

Cash Inflows: x

Cash Sales x 150 240 300

Collect AR x 280 350 560

Other x 70 80 1,500

Total Cash Inflows 500 670 2,360

----------------------------------------------------------------------------------------

Cash Outflows: x

Cash Purchases x 262.5 350 420

Pay AP x 75.1 12.5 150

Other x 140 150 155

Asset Purchase 500 x x

Total Cash Outflows 977.5 712.5 ___ (FILL IN)

NET CASH FLOW -477.5 -42.5 ___ (FILL IN)

-----------------------------------------------------------------------------------------

Beg Bal. 50 -427.5 _______(FILL IN)

End Bal. -427.5 -470.0 ___ (FILL IN)

R_________ ___ ___ ___ (FILL IN)

Surp(Loan) ______-477.50_______________________________________

22. What is the Net Cash Flow for NOVEMBER? a. $2,013 b. $725 c. -50 d. None

23. What is the size of loan Jackies Toy Company needs? RULE is Largest Negative Balance is the Loan required. a. $520.0 b. $477.5 c. $570.0 d. None

Answer & Explanation Solved by verified expert

See Answer