Long & Short Company Developed the Following Data for the Month

question 58

Essay

Long & Short Company developed the following data for the month of June.
1.
June 1 cash balance $2,300.
2.
Cash sales in June $67,000.
3.
Credit sales for June are $20,000; for May $10,000; and for April $16,000.Credit sales are collected as follows: 60% in the month of sale,20% in the following month,and 10% in the second month following the sale.
4.
Purchases for May were $34,000 and for June are $40,000.Half of purchases are paid in the month of purchase and the remainder in the following month.
5.
June salaries are $28,400,utilities are $1,090,and depreciation on the building is $1,000. A. What are the anticipated cash receipts from accounts receivable in June?
B. What is the anticipated total cash available in June?
C. What are the June cash payments for purchases?
D. What is the anticipated cash balance on June 30 ?

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Capital Lease

A lease agreement that has the characteristics of a purchase by the lessee, including transfer of ownership by the end of the lease term.

Leased Asset

A leased asset is a possession that is rented under a lease agreement, granting the lessee the right to use the asset in exchange for periodic lease payments.

Present Value

The immediate value of a future money amount or a stream of cash inflows, based on a certain rate of return.