finance data bank
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 longterm 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
interestfree 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 interestfree 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 interestfree 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 noninterest bearing account as
a compensating balance. Food Canning, Inc.'s shortterm 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 noninterest bearing account as a
compensating balance. The interest rate on the borrowed funds is 1.4 percent
per quarter. The Sport Store's shortterm 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
noninterest bearing account as a compensating balance. Your shortterm
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 noninterest bearing account as a compensating balance. Shortterm
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
shortterm 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

Rating:
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Solution: accounts data bank