Details of this Paper

FIN - Mayflower Nursery's projected sales for the period




Question;Mayflower Nursery's projected sales for the period February through September are shown below. Of Mayflower's sales, 25% are for cash,the remaining 75% are collected in the month following sale. Mayflower purchases its stock 1 month prior to the month of sale. Suppliersoffer a substantial discount for cash purchases, so Mayflower pays for its merchandise by EFT at the time of purchase. Purchases average65% of sales and fixed costs average $35,000 per month. Taxes amounting to 6.5% of the preceding 3 months' sales must be paid at theend of May (for March, April and May) and the end of August(for June, July and August).Mayflower's policy is to keep a minimum of $15,000 cash on hand in case of unforeseen cash demands or to take advantage of exceptionalopportunities. The company has negotiated a line of credit with its bank which allows it to borrow at an annual percentage rate of 6%Money is borrowed at the end of the month preceding the month in which it will be needed and interest is paid at the endof the following month. Mayflower's cash balance at the end of February was $18,000.SalesFebruary 110,000.00March 175,000.00April 190,000.00May 180,000.00June 150,000.00July 140,000.00August 125,000.001. 30% Construct a cash budget for the months of March through September. Use the format on page 561 of the text or the solutionto problem 17?12 in the class notes on Blackboard.2. 20% Use your budget to calculate the following amounts for the period March through August.a. Sales Revenueb. Cost of Goods Soldc. Gross Profitd. Cash Balance, Sept. 1e. Accounts Receivable, September 1.September 100,000.00


Paper#50072 | Written in 18-Jul-2015

Price : $22