Question - Gloomy's is a chain of department stores located thought the Northwest United States. The store makes roughly half of its sales during the busy holiday seasons from November to December. In order to meet operation expenses for the rest of the year, management hopes to end each holiday season (on December 31)
With at least $1,000,000 cash in the bank.
Currently, it is October 1, 2009, and the company's cash balance is $200,000. Assuming the following information, will Gloomy's achieve its goal of having $ 100,000,000 cash in the bank? Prepare a cash budget to determine the company's estimated cash balance at December 31, 2009.
Transactions expected from October 1 to December 31, 2009
Current Cash Balance $200,000
Expected Accrual Basic Net Income, 10/1-12/31 $1,500,000
Expected Cash Collections from Customers, 10/1-12/31 $17,000,000
Expected Cash Payments of Operating Expenses, 10/1-12/31 $15,000,000
Depreciation to be record in 12/31 adjusting entry $550,000
Debt Service Payment, due 12/1 $1,000,000
Expected Dividends to be paid to Shareholders, 12/15 $500,000