# finance data bank

Question # 00005291 Posted By: spqr Updated on: 12/13/2013 02:13 PM Due on: 12/15/2013
Subject Finance Topic Finance Tutorials:
Question

75. Forest Gardens, Inc., has a beginning receivables balance on February 1 of \$730. Sales for February through May are \$720, \$760, \$820, and \$850, respectively. The accounts receivable period is 30 days. What is the amount of the April collections? Assume a year has 360 days.
A. \$720
B. \$760
C. \$790
D. \$820
E. \$850

76. Davis and Davis have expected sales of \$490, \$465, \$450, and \$570 for the months of January through April, respectively. The accounts receivable period is 28 days. What is the accounts receivable balance at the end of March? Assume a year has 360 days.
A. \$420
B. \$426
C. \$440
D. \$450
E. \$482

77. The Athletic Sports Store has a beginning receivables balance on January 1 of \$410. Sales for January through April are \$440, \$460, \$690, and \$720, respectively. The accounts receivable period is 60 days. How much did the firm collect in the month of April? Assume a year has 360 days.
A. \$410
B. \$440
C. \$460
D. \$690
E. \$720

78. Breakwater Aquatics has a 45 day accounts receivable period. The estimated quarterly sales for this year, starting with the first quarter, are \$6,800, \$7,100, \$8,200, and \$6,400, respectively. What is the accounts receivable balance at the beginning of the third quarter? Assume a year has 360 days.
A. \$3,400
B. \$3,550
C. \$6,950
D. \$7,100
E. \$7,650

79. The Dog House expects sales of \$560, \$650, \$670, and \$610 for the months of May through August, respectively. The firm collects 20 percent of sales in the month of sale, 70 percent in the month following the month of sale, and 8 percent in the second month following the month of sale. The remaining 2 percent of sales is never collected. How much money does the firm expect to collect in the month of August?
A. \$621
B. \$628
C. \$633
D. \$639
E. \$643

80. The Wire House purchases its inventory one quarter prior to the quarter of sale. The purchase price is 55 percent of the sales price. The accounts payable period is 45 days. The accounts payable balance at the beginning of quarter one is \$62,000. What is the amount of the expected disbursements for quarter two given the following expected quarterly sales?

A. \$20,500
B. \$21,725
C. \$24,250
D. \$26,000
E. \$26,675

81. Nadine's Boutique has a 30 day accounts payable period. The firm has expected quarterly sales of \$1,100, \$1,400, \$1,700, and \$2,100, respectively, for next year. The quarterly cost of goods sold is equal to 68 percent of the next quarter's sales. The firm has a beginning accounts payable balance of \$550 as of Quarter 1. What is the amount of the projected cash disbursements for accounts payable for Quarter 3 of the next year? Assume a year has 360 days.
A. \$1,195
B. \$1,208
C. \$1,247
D. \$1,337
E. \$1,380

82. Kid's Delight expects to sell \$8,200 worth of toys in December, \$3,700 worth in January, \$4,400 in February, and \$6,100 in March. The wholesale cost is 72 percent of the retail price. The firm has a receivables period of 30 days, a payables period of 60 days, and buys inventory one month prior to selling it. Which one of the following statements is correct?
A. The February payments to suppliers are \$2,992.
B. The March collections are \$3,700.
C. The accounts receivable balance at the end of March is \$4,400.
D. The purchases for February are \$3,168.
E. The accounts payable balance at the end of January is \$5,832.

83. As of the beginning of the quarter, Swenson's, Inc. had a cash balance of \$460. During the quarter, the company collected \$520 from customers and paid suppliers \$360. The company also paid an interest payment of \$20 and a tax payment of \$110. In addition, the company repaid \$140 on its long-term debt. What is Callahan's cash balance at the end of the quarter?
A. -\$110
B. \$320
C. \$350
D. \$430
E. \$490

84. On May 1, your firm had a beginning cash balance of \$175. Your sales for April were \$430 and your May sales were \$480. During May, you had cash expenses of \$110 and payments on your accounts payable of \$290. Your accounts receivable period is 30 days. What is your firm's beginning cash balance on June 1?
A. \$145
B. \$155
C. \$205
D. \$215
E. \$265

85. The Mish Mash Store has a beginning cash balance of \$440 on March 1. The firm has projected sales of \$610 in February, \$680 in March, and \$740 in April. The cost of goods sold is equal to 70 percent of sales. Goods are purchased one month prior to the month of sale. The accounts payable period is 30 days and the accounts receivable period is 10 days. The firm has monthly cash expenses of \$160. What is the projected ending cash balance at the end of March? Assume every month has 30 days.
A. \$258
B. \$461
C. \$507
D. \$567
E. \$621

86. Fancy Footwear has a line of credit with a local bank in the amount of \$80,000. The loan agreement calls for interest of 7 percent with a compensating balance of 5 percent, which is based on the total amount borrowed. The compensating balance will be deposited into an interest-free account. What is the effective interest rate on the loan if the firm needs to borrow \$75,000 for one year to cover operating expenses?
A. 7.37 percent
B. 7.43 percent
C. 7.56 percent
D. 8.17 percent
E. 8.33 percent

87. Juno Industrial Supply has a \$150,000 line of credit with a 6.5 percent interest rate. The loan agreement requires a 2 percent compensating balance, which is based on the total amount borrowed, and which will be held in an interest-free account. What is the effective interest rate if the firm borrows \$90,000 on the line of credit for one year?
A. 6.42 percent
B. 6.47 percent
C. 6.50 percent
D. 6.58 percent
E. 6.63 percent

Amount borrowed = \$90,000/(1 - 0.02) = \$91,836.73
Annual interest = \$91,836.73ยด 0.065 = \$5,969.39
Effective interest rate = \$5,969.39/\$90,000 = 6.63 percent

88. Rachel's has a \$50,000 line of credit with Uptown Bank. The line of credit calls for an interest rate of 8 percent and a compensating balance of 4 percent. The compensating balance is based on the total amount borrowed and will be held in an interest-free account. What is the effective annual interest rate if the firm borrows \$35,000 for one year?
A. 7.76 percent
B. 8.00 percent
C. 8.17 percent
D. 8.33 percent
E. 8.42 percent

89. The collection period is 34 days. Assume that all accounts are collected in full. What is the effective annual interest rate on this arrangement?
A. 17.61 percent
B. 18.20 percent
C. 18.36 percent
D. 18.78 percent
E. 19.04 percent

90. New York Bank provides Food Canning, Inc. a \$250,000 line of credit with an interest rate of 1.75 percent per quarter. The credit line also requires that 1 percent of the unused portion of the credit line Delta Fish Hatchery factors its accounts receivables immediately at a 1.5 percent discount. The average be deposited in a non-interest bearing account as a compensating balance. Food Canning, Inc.'s short-term investments are paying 1.2 percent per quarter. What is the effective annual interest rate on this arrangement if the line of credit goes unused all year? Assume any funds borrowed or invested use compound interest.
A. 4.76 percent
B. 4.80 percent
C. 4.89 percent
D. 7.00 percent
E. 7.27 percent

91. The Sports Store has a \$100,000 line of credit with City Bank. The loan agreement requires that 2 percent of the unused portion of the credit line be deposited in a non-interest bearing account as a compensating balance. The interest rate on the borrowed funds is 1.4 percent per quarter. The Sport Store's short-term investments are paying 1.5 percent per quarter. What is the effective annual interest rate on the line of credit if The Sports Store borrows the entire \$100,000 for one year? Assume any funds borrowed or invested use compound interest.
A. 5.72 percent
B. 5.76 percent
C. 6.00 percent
D. 6.08 percent
E. 6.14 percent

92. Your bank offers you a \$40,000 line of credit with an interest rate of 1.75 percent per quarter. The loan agreement also requires that 2 percent of the unused portion of the credit line be deposited in a non-interest bearing account as a compensating balance. Your short-term investments are paying 0.20 percent per month. What is your effective annual interest rate on this arrangement if you do not borrow any money on this credit line during the year? Assume any funds borrowed or invested use compound interest.
A. 2.00 percent
B. 2.43 percent
C. 3.18 percent
D. 7.00 percent
E. 7.19 percent

93. New Town Bank offers you a \$40,000 line of credit with an interest rate of 1.85 percent per quarter. The loan agreement also requires that 3 percent of the unused portion of the credit line be deposited in a non-interest bearing account as a compensating balance. Short-term investments are currently paying 1.1 percent per quarter. What is the effective annual interest rate on the line of credit if you borrow the entire \$40,000 for one year? Assume any funds borrowed or invested use compound interest.
A. 4.47 percent
B. 4.58 percent
C. 7.61 percent
D. 7.78 percent
E. 12.33 percent

94. Josie's Craft Shack has a beginning cash balance for the quarter of \$1,126. The store has a policy of maintaining a minimum cash balance of \$1,000 and is willing to borrow funds as needed to maintain that balance. Currently, the firm has a loan balance of \$480. How much will the store borrow or repay if the net cash flow for the quarter is -\$280?
A. \$0
B. \$28
C. \$126
D. \$154
E. \$280

95. The Cement Works has a beginning cash balance for the quarter of \$784. Susie, the firm's president, requires that a minimum cash balance of \$800 be maintained and requires that borrowing be used to maintain that balance. If funds have been borrowed, then she requires that those loans be repaid as soon as excess funds are available. Currently, the firm has a loan outstanding of \$1,260. How much will the firm borrow or repay this quarter if the quarterly receipts are \$3,918 and the quarterly disbursements are \$3,774?
A. borrow \$16
B. borrow \$128
C. borrow \$144
D. repay \$128
E. repay \$144

.

96. At the beginning of the year, you have an outstanding short-term loan of \$274 which was used to cover your cash needs for the previous year. The interest expense for the year is \$19. The projected net cash flow for this year is \$123, prior to any payment of principal or interest on this loan. What is your anticipated loan balance at year end?
A. \$151
B. \$170
C. \$176
D. \$189
E. \$193

Tutorials for this Question
1. ## Solution: accounts data bank

Tutorial # 00005113 Posted By: spqr Posted on: 12/13/2013 10:33 PM
Puchased By: 2
Tutorial Preview
account. What is the effective interest rate on the loan ...
Attachments
800.docx (11.07 KB)

Great! We have found the solution of this question!