FIN 5130 Quiz 5 Questions and Quiz 5 Extra Credit 2015

 ABC Company has annual sales of $400,000 and cost of goods sold of $197,844. The accounts payable period is 30.28 days. What is the average accounts payable balance?
Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
– ABC Corporation currently has an inventory turnover of 16, a payables turnover of 13.8, and a receivables turnover of 5.41. How many days are in the operating cycle?
Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
– ABC Company writes 243 checks a day for an average amount of $553 each. These checks generally clear the bank in 5 days. In addition, the firm generally receives an average of $140,484 a day in checks that are deposited immediately. Deposited funds are available in 1 days. What is the firm’s net float?
Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Month Sales $ Month Sales $
Jan 12,023 July 21,311
Feb 37,066 Aug 16,876
Mar 16,876 Sep 12,023
Apr 21,311 Oct 16,876
May 12,023 Nov 37,066
June 37,066 Dec 21,311
Sales are collected as follows:
In the month of Sales: 20%
In the next month: 26%
After 2 months: 5%
After 3 months: remainder is collected
Calculate the cash collection for November.
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.– Compute the Accounts Payable (A/P) period based on the following information:
Average A/P balance = $53,204
Annual Cost of Goods Sold = $218,177
Assume 365 days
Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
Month Sales $ Month Sales $
Jan 16,535 July 20,108
Feb 29,262 Aug 32,073
Mar 32,073 Sep 16,535
Apr 20,108 Oct 32,073
May 16,535 Nov 29,262
June 29,262 Dec 20,108

Sales are collected as follows:
In the month of Sales: 38%
In the next month: 25%
After 2 months: 10%
Remainder is considered as bad debt and is not collected.
Calculate the cash collection for June.
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
– As of this morning, your firm had a ledger balance of $4,953 with no outstanding deposits or checks. Today, your firm deposited 2 checks in the amount of $276 each and wrote a check in the amount of $875. What is the amount of the collection float as of the end of the day?
Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
– On July 15th, you purchased $10,000 worth of goods. The terms of the sale were 1/5, net 30. What is the effective annual rate of interest for the credit period for this sale?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

– Compute the cash cycle based on the following information:
Average Collection Period = 31
Accounts Payable Period = 32
Average Age of Inventory = 69

– ABC Company has an average collection period of 25 days and factors all of its receivables immediately at a 2.4 percent discount. Assume all accounts are collected in full. What is the firm’s effective cost of borrowing?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.
– The terms of the sale were 1/17, net 28. What is the effective annual rate of interest?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.
– ABC Company has annual sales of $413,375 and cost of goods sold of $198,600. The average accounts receivable balance is $52,359. How many days on average does it take the firm to collect its accounts receivable? Assume 365 days.
Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
– As of this morning, your firm had a ledger balance of $3,757 with no outstanding deposits or checks. Today, your firm deposited 9 checks in the amount of $280 each and wrote 2 checks in the amount of $663 each. What is the amount of the disbursement float as of the end of the day?
Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Month Sales $ Month Sales $
Jan 41,700 July 39,182
Feb 18,921 Aug 17,281
Mar 17,281 Sep 41,700
Apr 39,182 Oct 17,281
May 41,700 Nov 18,921
June 18,921 Dec 39,182
Sales are collected as follows:
In the month of Sales: 20%
In the next month: 28%
After 2 months: 10%
After 3 months: remainder is collected
Calculate the cash collection for December.
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Month Sales $ Month Sales $
Jan 38,452 July 27,114
Feb 35,290 Aug 47,212
Mar 47,212 Sep 38,452
Apr 27,114 Oct 47,212
May 38,452 Nov 35,290
June 35,290 Dec 27,114

The company has estimated expenses as follows:
General and administrative expenses: $8,174
Material purchases are 44 percent of sales. Material purchases are paid in the month following the purchase.
Interest payment per month: $4,707
Rent expenses per quarter starting March: $7,113
Calculate the cash outflows for June.
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
– ABC Corporation currently has an inventory turnover of 12.68, a payables turnover of 21.55, and a receivables turnover of 7.7. How many days are in the cash cycle?
Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
– ABC Company has a cash cycle of 13.84 days, an operating cycle of 19.33 days, and an average collection period of 4 days. The company reported cost of goods sold of $291,337. What is the company’s average balance in Accounts Payable?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box
– Indicate the effect of the following on the cash cycle: Customers take longer to make the payment

Decrease

No change

Increase

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FIN 5130 Instructor: Dr. Palkar
Quiz 5 Extra Credit
Page 1 of 1
Late assignments will not be accepted so please plan accordingly. You need to show
your working notes for credit. You must submit your work using excel files (with
.xls or .xlsx for credit). You must upload your files on Blackboard under the
Assignment Dropbox for credit.
This assignment will require you to prepare the cash budget and determine the cash
surplus and shortage each month.
The management estimates total sales for the period January through July based on actual
sales from the immediate past quarter. The following assumptions are made:
Sales: Past and Expected
October $300,000 January $150,000
November $350,000 February $200,000
December $400,000 March $200,000
April $300,000
May $250,000
June $200,000
July $300,000
Historical Forecast
a. Sales are 75% on credit basis and 25% on cash basis. 60% of credit sales are
collection one month after sale, 30% in the second month, and 10% in the third
month. Bad debts are insignificant.
b. Purchases are 80% of sales and are paid as follows: 50% of sales are paid in the same
month and the remaining 50% are paid in the following month.
c. Wages and salaries are as follows:
January $30,000
February $40,000
March $50,000
April $50,000
May $40,000
June $35,000
d. Rent is $2,000 per month
e. Interest on $500,000 of 16% bonds is due on the calendar quarter. Hint: you need to
calculate the quarterly interest amount, and this interest will be paid each calendar
quarter.
f. A tax prepayment of $50,000 is due in April.
g. A machinery worth $30,000 will be purchased in June.
h. The company has a cash balance of $100,000 on January 1st, which is the minimum
balance maintained each month.
1. Prepare cash budget for Jan to June.
2. Determine the cash surplus and shortages for each month.