O'Brien Company Has the Following Information O'Brien Company Wants to Maintain a Minimum Cash Balance of June

question 95

Essay

O'Brien Company has the following information:
$\begin{array}{ll}\text { Cash Balance, June } 30 & \$ 50,000 \\\text { Dividends paid in July } & 60,000 \\\text { Cash paid for operating expenses in July } & 185,500 \\\text { Depreciation expense in July } & 12,000 \\\text { Cash collections on sales in July } & 510,000 \\\text { Merchandise purchases paid in July } & 180,000 \\\text { Purchase equipment for cash in July } & 94,500\end{array}$
O'Brien Company wants to maintain a minimum cash balance of $50,000.Assume that borrowing occurs at the beginning of the month and repayments occur at the end of the month.Interest of 1% per month is paid in cash at the end of each month debt is outstanding.Borrowing and repayment is carried out in multiples of $1,000.
Required:
Prepare a cash budget for July.

Evaluate financial performance metrics including net operating income and average operating assets.

Understand the impact of new investment opportunities on existing financial metrics.

Calculate sales and net operating income for different fiscal periods.

Analyze financial improvement or degradation over fiscal years.

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Definitions:

Sales

Sales refer to the total amount of goods or services sold by a company, which is a direct indicator of its business performance.

Cash Collections

The process of gathering and managing payments received from customers or clients.

Sales

The total amount of a company's revenues earned from selling goods or services over a certain period of time.

Cost of Goods Sold

Cost of Goods Sold (COGS) indicates the direct costs attributable to the production of the goods sold by a company, including material and labor expenses.