1) Vicky's Apparel has forecast credit sales for the fourth quarter of the year as: Sept:

(actual)----$50,000 Fourth Quarter Oct: ----$40,000 Nov:-----$35,000 Dec:_----$60,000

Experience has shown that 20% of sales receipts are collected in the month of sale, 70%
in the following month, and 10% are never collected. Prepare a schedule of cash receipts
for Vicky's Apparel covering the 4th quarter (oct-Dec).

September October November December

Credit sales $50,000 $40,000 $35,000 $60,000
20% Collected
in month of 8,000 7,000 12,000
sales
70% Collected
in month after 35,000 28,000 24,500
sales
Total cash
receipts $43,000 $35,000 $36,500

2) The Man Company has financial statements as shown below, which are representative
of the company's historical average. The firm is expecting a 20% increase in sales next yr,
and management is concerned about the company's need for external funds. The increase
in sales is expected to be carried out w/out any expansion of fixed assests, but rather
through more efficient asset utilization in the existing store. Among liabilities, only
current liabilities vary directly w/ sales. Using the percent-of-sales method, determine
whether the company has external financing needs, or a surplus of funds. (hint: a profit
margin and payout ratio must be found from the income statement.) Income Statement:
sales---$200,000 Expenses---$158,000 Earnings before interest and taxes---$42,000
Interest---$7,000 Earning before taxes---$35,000 Taxes---$15,000 Earnings after taxes---
$20,000 Dividends---$6,000 Balance Sheet Asset Cash----$5,000 inventory---$75,000
Current assets---$120,000 fixed assests---$80,000 total assests---$200,000 Liabilities and
Stockholder's Equity Accts payable---$25,000 Accrued wages---$1,000 Accrued taxes---
$2,000 Current liabilities---$28,000 Notes payable---$7,000 Long term-debt---$15,000
Common Stock---$120,000 Reatained Earnings---$30,000 Total liabilities and
stockholders' equity---$200,000
 Earnings after taxes $20,000
Profit margin    10%
Sales $200,000
Dividends $6,000
Payout ratio    30%
Earnings 20,000
Change in Sales  20%  $200,000  $40,000
Spontaneous Assets = Current Assets = Cash + Acc. Rec. +
Inventory

Spontaneous Liabilities = Acc. Payable + Accr. Wages + Accr.

Taxes


RNF   S  L  S  PS2 1  D 
S S
$120,000
  $40,000  $28,000  $40,000  .10 $240,0001  .30 
$200,000 $200,000
 .60 $40,000   .14 $40,000   .10 $240,000  .70 

 $24,000  $5,600  $16,800

RNF  $1,600

The firm needs $1,600 in external funds.