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Bill’s Stereo Shop wants to borrow $50,000 from April 1st. until April 30th. It sales equipment...

  1. Bill’s Stereo Shop wants to borrow $50,000 from April 1st. until April 30th. It sales equipment in an area where its typical customer is a member of the armed services or a veteran. Prepare a cash budget for Bill’s Stereo Shop for April using the following data:
    1. March 30th. cash balance $5,000
    2. Merchandise purchases: $50,000 in February, and $55,000 in March. (Bill’s history suggests that 50% of purchases is paid in cash 30 days after purchase and 50% is paid in 60 days after purchase.
    3. Merchandise sales: $100,000 in February, and $125,000 in March. (All sales are credit sales. Bill’s history suggests that 75% of sales are collected in 30 days, and 20% of the sales are collected in 60 days. The other 5% are never collected.)
    4. Interest on bank loan $1,000.
    5. Bill’s expects sequestration to cause somewhere between 5% and 10% of additional customers not to pay.

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