Instant download to solution. Once the payment is made, the solution file link will be auto-mailed to your specified E-mail id. Check your inbox as well as spam folder. You can download the solution file by clicking that link.
Herbal care Corp. , a distributor of herb-based sunscreens is ready to begin its third quarter in which peak sales occur. The company has requested a $40,000, 90 day loan from its bank to help meet cash requirements during the quarter. Since Herbal care has experienced difficulty in paying off its loan in the past, the loan officer at the bank has asked the company to prepare a cash budget for the quarter. In response to this request, the following data have been assembled:
Past experience shows that 25% of the month’s sales are collected in the month of sale, 70% in the month following sale, and 3% in the second month following sale. The remainder is uncollectible.
Salaries and wages
Merchandise purchases are paid in full during the month following purchases. Accounts payable for merchandise purchase on June 30, which will be paid during July, total $180,000.