Nichols Co

question 59

Essay

Nichols Co.has the following information for the second quarter of 2012:
Cost of Goods Sold is 75% of Sales; all cash
Operating expenses is 10% of Sales; all cash
Income taxes paid:
The minimum cash balance for any month is $10,000.
Prepare a cash budget for each month in the second quarter of 2012,showing any excess cash or any financing needed.Any interest on the financing will be deferred until the fiscal year end in December.

Understand the components of operating, investing, and financing sections of the statement of cash flows.

Describe the importance of noncash expenses in the operating section of cash flows and their adjustments.

Identify transactions that affect long-term assets and liabilities, and equity in the context of cash flows.

Recognize the sources of information required to prepare the statement of cash flows.

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Definitions:

General Purpose

The broad intent of a message—to inform, to persuade, or to collaborate with the audience.

Proposal

A formal suggestion or plan, often in business, for consideration or action.

Persuade

The act of convincing someone to do or believe something through reasoning or argument.

Close

To conclude or bring to an end; in financial contexts, it refers to the end of a trading session.