Schedule of Cash Collections Prestige Hotels, Inc

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Schedule of Cash Collections Prestige Hotels, Inc. estimates that 20% of its monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 30% pay their accounts in the month of sale, while the remaining 70% pay their accounts in the month following the month of sale. Projected sales for the next three months are as follows: Estimated TOTAL SALES The Accounts Receivable balance on September 30 = $67,200. October 150,000 November 180,000 December 230,000 Required: A. Prepare a cash collection schedule for October, November and December. B. Determine the amount of Accounts Receivable at the end of each month c. Detemine the Accounts Receivable Balance to be realance Sheet on December 31 20Y1. . Formula Bar SOLUTON: Prestige Hotels, Inc Cash Receipt Schedule for the Three Months Ending December 31, 20Y1 October November December Receipt from cash sales (20% of sales) 30,000 36,000 46,000 A A September sales on account: 67,200 120,000 36,000 84,000 October sales on account: (80% of Total Sales) Collected in October Collected in November November sales on account: Collected in November (30%) Collected in December (70%) December sales on account: (80% of total sales) Collected in December (30% of sales on acct) Total cash receipts (cash actually collected) 84,000 144.000 43,200 100,800 100,800 184,000 55,200 2020na 133 2na 163 200 84,000 100,800 128,800 B. A/R Balance at the end of the month (this is always the amount to be collected the next month) c Account receivable balance to be reported in the balance shket on Dec 31, 20Y1 = $128,800 Schedule of Cash Disbursement Prestige Hotels, Inc. estimates projected Selling and Administrative expenses forth the 4th Quarter to be as follows: Estimated TOTAL EXPENSES October November December $ $ $ 107,000.00 125,000.00 115,000.00 Depreciation Insurance Property taxes $5000 per month $ $3,000 per month $4,000 per month Paid in month incurred Paid in following month Policy from feb 1. Jan 31 Taxes due in full January 18 60% of remaining expenses 40% of remaining expenses Required: A. Prepare a cash disbursement schedule for October, November and December. B. Determine the amount of Accounts Payable for the end of each month C. Detemine the Accounts Receivable Balance to be reported in the Balance Sheet on December 31 20Y1. SOLUTION: A. Prestige Hotels, Inc. Cash Disbursement Schedule for the Three Months Ending December 31, 20Y1 , October November December Cash Expenses October Expenses Paid in October Paid in November 95.000 57,000 38,000 38,000 November Expenses Paid in November Paid in December 113,000 67,800 45,200 45,200 December Expenses Paid in December Paid in January Y2 103,000 61.800 41,200 Total cash disbursements (cash actually paid) 57000 105,800 107.000 38,000 45,200 B. AP Balance at the end of the month (this is always the amount to be paid next month) C. Account Receivable balance to be reported in the balance sheet on Dec 31, 20Y1 = $41,200 Cash Budget Prestige Hotels, Inc. Wishes to build a new hotel and desires to put aside a reserve of $80,000 each month for new capital expenditures. Company policy is to have at least 80,000 of cash balance at the end of each month. The company has a line of credit that requires borrowing and payments in increments of $1,000, the company pulls from the LOC on the last day of the month. Interest is also paid on the last day of the month Interest is 1% of the previous months outstanding balance. October Beginning cash balance is $0 Required: A. Prepare the cash budget using the cash receipt and disbursement schedules and the above information SOLUTION: A. Prestige Hotels, Inc. Cash Disbursement Schedule for the Three Months Ending December 31, 20Y1 October November December Beginning Cash Balance Add Cash Receipts Cash Available for the Month 0 133,200 133,200 80,200 163,200 243,400 164,760 202.000 366,760 Cash Disbursements for Selling and Admin Exp Cash for Capital Expenditure reserves Cash for Interest payments Total Cash Disbursements (57,000) (80,000) 0 (137,000) (105,800) (80,000) (840) (186,640) (107,000) (80,000) (1,080) (188,080) Financing Surplus (Shortage) Borrowing (Repayment) Ending Cash Balance Ending LOC Balance (3,800) 84,000 80,200 84,000 56,760 108,000 164,760 108,000