CMA Study Group

  • 1.  part 1 Question

    Posted 08-08-2012 08:54 AM
    hi,


    Tidwell Corporation sells a single product for $20 per unit. All sales are on account, with
    60% collected in the month of sale and 40% collected in the following month. A
    schedule of cash collections for January through March of the coming year reveals the
    following receipts for the period.


                                                                                 Cash Receipts
                                                             January            February         March
                        December receivables $32,000
                        From January sales        54,000            $36,000
                        From February sales                                66,000       $44,000
                        From March sales                                                          72,000

    Other information includes the following.

    Other information includes the following.
    -  Inventories are maintained at 30% of the following month's sales.
    - Tidwell desires to keep a minimum cash balance of $15,000. Total
       payments in January are expected to be $106,500, which excludes $12,000
       of depreciation expense. Any required borrowings are in multiples of
       $1,000.
    -  The December 31 balance sheet for the preceding year revealed a cash
        balance of $24,900.

    Ignoring income taxes, the financing needed in January to maintain the firm's minimum
    cash balance is

    a. $8,000.
    b. $10,600.
    c. $11,000.
    d. $23,000.

    thankes





    -------------------------------------------
    Ayda Fahim Samaan
    Accountant
    Mina Tex
    Sidi Beasher
    Egypt
    -------------------------------------------


  • 2.  RE:part 1 Question

    Posted 08-08-2012 09:02 AM
    Hi again,

    Total in January: 32,000+54,000=86,000
    Out: 106,500 (is given, no need to calculate payment for purchases).
    Ending cash: 24,900+86,000-106,500=4,400. Minimum is 15,000, so they need 10,600 and in multiples of 1,000 this is 11,000 (C)   

    -------------------------------------------
    Nicolaas Johannes Breman
    Consultant
    Conquaestor
    Assendelft
    Netherlands
    -------------------------------------------






    Original Message


  • 3.  RE:part 1 Question

    Posted 08-08-2012 02:20 PM
    Correct answer c. The units to be purchased in February total 6,100 units.

    February unit sales = ($66,000 + $44,000) ÷ $20 = 5,500 units
    March unit sales = $150,000 ÷ $20 = 7,500 units
    February purchase = (5,500 x .7) + (7,500 x .3) = 6,100 units

    -------------------------------------------
    Patricia Abels CPA
    Academic
    The University of Findlay
    Findlay OH
    United States
    -------------------------------------------






    Original Message


  • 4.  RE:part 1 Question

    Posted 08-11-2012 01:39 AM

    This question answer as follows:
                                          January
     Sales                                90000
    Beg. cash balance               24900
    A/R from Dec.                     32000
    Collec. from Jan.                 54000
    Payments                          -106500
    Min. Cash balance              -15000
                                           -----------
                                            -10600
    Should financing                 11000
                                            ===== 




    -------------------------------------------
    Moustafa Mohamed Aly Abdel Nabi
    Accountant
    BELRESHEED BLDG. CONT.
    Sharjah
    United Arab Emirates
    -------------------------------------------






    Original Message