Todd Enterprises Is Preparing a Cash Budget for the Second

question 203

Essay

Todd Enterprises is preparing a cash budget for the second quarter of the coming year. The following data have been forecasted:
Additional data:
(1) Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000.
(2) Purchases are all on credit, with 40% paid in the month of purchase and 60% paid in the following month.
(3) Operating expenses are paid in the month they are incurred.
(4) A minimum cash balance of $25,000 is required at the end of each month.
(5) Loans are used to maintain the minimum cash balance. At the end of each month, interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month. Repayments are made at the end of the month if the cash balance exceeds $25,000.
Prepare the company's cash budget for May. Show the ending loan balance at May 31.

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Definitions:

Last-In/First-Out

A data structure principle where the most recently added element is the first to be removed, exemplified by a stack.

Stack

A stack is a collection or data structure that adheres to the Last-In-First-Out (LIFO) principle, where items are added and removed from the top.

Queue

A queue is a collection or data structure that follows the First-In-First-Out (FIFO) principle, where elements are added from one end and removed from the other.

Recursive Solution

A method of solving a problem where the solution involves calling a function itself with modified parameters.