Thunderbolt Corporation Is in the Process of Preparing Its Budget

question 108

Essay

Thunderbolt Corporation is in the process of preparing its budget for next year. Cost of goods sold has been estimated at 60 percent of sales. Merchandise purchases are to be made during the month preceding the month of the sales. Thunderbolt pays 60 percent in the month of purchase, and 40 percent in the month following. Wages are estimated at 20 percent of sales and are paid during the month of sale. Other operating costs amounting to 10 percent of sales are to be paid in the month following the sale. The accounts payable balance on June 30 was $48,000.
Month Sales
June $170,000
July 200,000
August 120,000
September 150,000
October 160,000
November 100,000
Required:
Prepare a schedule of cash disbursements for July, August, and September.

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Definitions:

Amortized Loan

a loan in which the principal and interest are paid down over time through fixed monthly payments.

Effective Rate

The effective rate, often referred to as the effective annual rate, is the interest rate on a loan or financial product re-compounded on a yearly basis.

Amortization Schedule

An amortization schedule is a table detailing each periodic payment on an amortizing loan, illustrating how the principal amount is reduced over time.

Effective Rate

The actual interest rate an individual pays on a loan or earns on an investment, accounting for compounding.