The ZYX Corporation Is Planning to Request a Line of Credit

question 67

Essay

The ZYX Corporation is planning to request a line of credit from its bank and wants to estimate its cash needs for the month of September.The following sales forecasts have been made for 2010:
Collection estimates were obtained from the credit collection department as follows:
20% collected within the month of sale; 70% collected the first month following this sale; and 10% collected the second month following the sale.Payments for labor and raw materials are typically made in the month in which these costs are incurred.Total labor and raw material costs each month are 50% of sales.General administrative expenses are $30,000 per month,lease payments are $10,000 per month,and depreciation charges are $20,000 per month.The corporation tax rate is 40%; however,no corporate taxes are paid in September.Prepare a pro forma income statement and cash budget for September.

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Definitions:

Ethical Guidelines

A set of principles designed to guide decision-making and conduct when ethical issues arise, often used in professional and research contexts to ensure integrity and protect welfare.

Pain And Suffering

The physical discomfort and emotional distress that one may experience due to injury, illness, or loss.

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Logical

Pertaining to the use of reason and clear thinking, often related to formal systems of thought and the principles of validity in arguments and propositions.