This is an account question that comes with an income statement chart.

L&P Merchandising & More, Michael Stona

a) Schedule of Budgeted Cash Collections for October to December 2020:

                                        October     November    December  Quarter Total

Cash Sales                     $132,680     $105,900     $216,000    $454,580

Credit Sales:

 60% month of sale     $432,000     $390,000    $480,000   $1,302,000

    less 5% discount         (21,600)        (19,500)       (24,000)         (65,100)

 30% month following $180,000     $216,000     $195,000       $591,000

 10% second month      $48,000      $60,000       $72,000       $180,000

Other cash collections:

 Sale of Motor Vehicle                      $80,000       $30,000       $110,000

 Sale of investments    $480,000                                              $480,000

 Investment interest      $54,000                                               $54,000

 Rental & Safety Deposit                 $135,000       $45,000    $180,000

Total Collections        $1,305,080   $967,400   $1,014,000 $3,286,480

b) Schedule of Expected Cash Disbursements for Purchases on Account for the quarter to December 31, 2020:

                                       October    November    December  Quarter Total

Credit Purchases:

 80% purchase month $384,000   $320,000     $400,000   $1,104,000

  less 3% cash discount   (11,520)        (9,600)         (12,000)        (33,120)

 20% following month     72,000       96,000          80,000       248,000

Total disbursement     $444,480   $406,400      $468,000   $1,318,880

c) Cash Budget:

                                     October    November    December  Quarter Total

Beginning balance    ($138,000)   (220,400)    (602,400)

Cash Receipts         $1,305,080    $967,400   $1,014,000    $3,286,480

Less purchases        ($444,480)  ($406,400)  ($468,000)    ($1,318,880)

Less fixed expenses  (135,000)      (135,000)     (135,000)       (405,000)

Less other expenses  (58,000)       (58,000)       (58,000)        (174,000)

Less Rea Equipment                                           (240,000)      (240,000)

Wages & Salaries     (245,000)     (245,000)     (245,000)      (735,000)

Retroactive wages   (380,000)      (380,000)                           (760,000)

Cash balance            (95,400)       (477,400)     (734,400)

Minimum balance   (125,000)        (125,000)     (135,000)

Bank Overdraft      (220,400)       (602,400)     (859,400)

d) Will the business meet the required minimum cash balance of $125,000?

No.

e) Three steps other than borrowing to improve cash flow:

1) The volume of Sales must be increased.

2) Trade terms should be improved with customers and suppliers.

3) Expenses must be controlled to reduce outlay.

Explanation:

a) Sales Budget

Month           Cash Sales    Sales on Account   Purchases on Account

August              $121,000         $480,000                  $390,000

September       $95,500         $600,000                  $360,000

October           $132,680         $720,000                  $480.000

November      $105,900         $650,000                  $400,000

December      $216,000         $800,000                  $500,000

b) Accounts Receivables' credit terms are 5/30, net 90 days.  This means that cash discounts of 5% are allowed for settlements within 30 days, and the maximum credit period is 90 days.

c) Sale of Motor Vehicle:

Cost of Vehicle            $650,000

less Acc. Depreciation $475,000

Book Value                   $175,000

Profit on sale                 $25,000

Selling Price                 $200,000

40% of $200,000 = $80,000

Quarter receipts = $30,000 ($200,000 - 80,000) /4

c) Safety Deposit is equal to two months rental = $540,000/12 * 2 = $90,000.

First Rental + Safety Deposit = $135,000 ($540,000/12 * 3)

d) A cash budget helps management to forecast its cash collections and disbursements.

L&P Merchandising & More, Michael Stona

a) Schedule of Budgeted Cash Collections for October to December 2020:

                                        October     November    December  Quarter Total

Cash Sales                     $132,680     $105,900     $216,000    $454,580

Credit Sales:

 60% month of sale     $432,000     $390,000    $480,000   $1,302,000

    less 5% discount         (21,600)        (19,500)       (24,000)         (65,100)

 30% month following $180,000     $216,000     $195,000       $591,000

 10% second month      $48,000      $60,000       $72,000       $180,000

Other cash collections:

 Sale of Motor Vehicle                      $80,000       $30,000       $110,000

 Sale of investments    $480,000                                              $480,000

 Investment interest      $54,000                                               $54,000

 Rental & Safety Deposit                 $135,000       $45,000    $180,000

Total Collections        $1,305,080   $967,400   $1,014,000 $3,286,480

b) Schedule of Expected Cash Disbursements for Purchases on Account for the quarter to December 31, 2020:

                                       October    November    December  Quarter Total

Credit Purchases:

 80% purchase month $384,000   $320,000     $400,000   $1,104,000

  less 3% cash discount   (11,520)        (9,600)         (12,000)        (33,120)

 20% following month     72,000       96,000          80,000       248,000

Total disbursement     $444,480   $406,400      $468,000   $1,318,880

c) Cash Budget:

                                     October    November    December  Quarter Total

Beginning balance    ($138,000)   (220,400)    (602,400)

Cash Receipts         $1,305,080    $967,400   $1,014,000    $3,286,480

Less purchases        ($444,480)  ($406,400)  ($468,000)    ($1,318,880)

Less fixed expenses  (135,000)      (135,000)     (135,000)       (405,000)

Less other expenses  (58,000)       (58,000)       (58,000)        (174,000)

Less Rea Equipment                                           (240,000)      (240,000)

Wages & Salaries     (245,000)     (245,000)     (245,000)      (735,000)

Retroactive wages   (380,000)      (380,000)                           (760,000)

Cash balance            (95,400)       (477,400)     (734,400)

Minimum balance   (125,000)        (125,000)     (135,000)

Bank Overdraft      (220,400)       (602,400)     (859,400)

d) Will the business meet the required minimum cash balance of $125,000?

No.

e) Three steps other than borrowing to improve cash flow:

1) The volume of Sales must be increased.

2) Trade terms should be improved with customers and suppliers.

3) Expenses must be controlled to reduce outlay.

Explanation:

a) Sales Budget

Month           Cash Sales    Sales on Account   Purchases on Account

August              $121,000         $480,000                  $390,000

September       $95,500         $600,000                  $360,000

October           $132,680         $720,000                  $480.000

November      $105,900         $650,000                  $400,000

December      $216,000         $800,000                  $500,000

b) Accounts Receivables' credit terms are 5/30, net 90 days.  This means that cash discounts of 5% are allowed for settlements within 30 days, and the maximum credit period is 90 days.

c) Sale of Motor Vehicle:

Cost of Vehicle            $650,000

less Acc. Depreciation $475,000

Book Value                   $175,000

Profit on sale                 $25,000

Selling Price                 $200,000

40% of $200,000 = $80,000

Quarter receipts = $30,000 ($200,000 - 80,000) /4

c) Safety Deposit is equal to two months rental = $540,000/12 * 2 = $90,000.

First Rental + Safety Deposit = $135,000 ($540,000/12 * 3)

d) A cash budget helps management to forecast its cash collections and disbursements.

Paying extra on your mortgage means that you make additional payments to your principal loan balance beyond your regular payments. For example, if you pay $1,300 per month normally, you may pay an extra $200 to the principal for a total payment of $1,500. Or if you get a bit of money, say a $5,000 tax refund, you could apply it to your principal loan balance. The faster you pay off your mortgage, the less you will pay in interest, reducing your overall loan cost. However, this option should be considered in the context of your larger financial situation.How much will you save by making extra payments?The amount you can save by making extra mortgage payments is one of the first things you need to figure out as that number will enable you to compare it to other options. Let’s take a look at how much you could save on interest over the life of a 30-year, $200,000 loan with a 3.5% interest rate if you paid $50, $100 and $250 extra each month. Just paying an extra $50 per month will shave 2 years and 7 months off the loan and will save you over $12,000 in the long run. If you can up your payments by $250, the savings increase to over $40,000 while the loan term gets cut down by almost a third.The savings can be substantial. Use a mortgage calculator to figure out your estimated savings. Then, compare that to the savings or returns you can get by investing the same money elsewhere.Ways to prepay your mortgagePay more every monthThe first option is to analyze your budget and see if you can afford to increase the amount you pay on your mortgage each month. Even if you can only commit to $25 or $50, it can save you thousands over the course of the loan.Make an extra payment each year Another option is to make one extra payment each year that is equal to your normal payment amount. This can be a good option if you get a bonus or tax refund each year.Make a lump-sum paymentSometimes situations come about which leave people with a lump sum of money, like receiving an inheritance. While exciting, it can also be stressful because you want to use the money wisely. Using lump sums to pay down your mortgage helps to reduce your interest and increase equity faster, which is a helpful investment. It can also ensure that the money is invested rather than spent.Mix it up You can also use a combination of these approaches, such as paying a little bit more each month and then making a larger one-time payment when you can.

The right payment strategy for you will depend on your financial situation. For example, if your budget is tight and you can’t commit to paying more every month but have certain months when your income is higher, you can commit to making an extra payment during those months. Alternatively, if you don’t receive any income boosts throughout the year but have a little bit of disposable income each month, the monthly payment option will be a better fit.When not to pay extraPaying extra on your mortgage can be helpful but it isn’t always the best use of your money.“Whether you should pay extra on your mortgage or not depends on the rest of your financial picture. If you have credit card debt, an expensive car loan, or other high-interest debt, you’ll want to pay that down before making extra payments on your mortgage,” Matthew McEwan, VP of real estate development and property management firm Medallion Capital Group, said.“Additionally, if you are a savvy investor who can tolerate some risk, you may be able to achieve a higher rate of return by investing that money instead,” McEwan said.What to do before paying off your loan earlyBefore you pay off your mortgage early, there are a few things you should do. For one thing, you’ll want to meet all of your regular necessary expenses (rent, food, clothing, etc.). Next, ensure you pay off any debts you have with interest rates that are higher than the interest rate on your mortgage. For example, if you have a $5,000 balance on a credit card with an 18% APR and your mortgage has a 4% APR, you’ll save more by paying down the credit card first.It’s also recommended to make sure that you have an emergency savings account that is equal to at least three months of pay, and preferably six. Moreover, confirm that you and your dependents are enrolled in the insurance policies you need to protect yourselves in the future. This often includes health, property, auto, disability and life policies.

If you have an employer offer to match your retirement savings up to a certain percentage, max out the company contributions. The earlier you invest in retirement, the better.

Paying extra on your mortgage means that you make additional payments to your principal loan balance beyond your regular payments. For example, if you pay $1,300 per month normally, you may pay an extra $200 to the principal for a total payment of $1,500. Or if you get a bit of money, say a $5,000 tax refund, you could apply it to your principal loan balance. The faster you pay off your mortgage, the less you will pay in interest, reducing your overall loan cost. However, this option should be considered in the context of your larger financial situation.How much will you save by making extra payments?The amount you can save by making extra mortgage payments is one of the first things you need to figure out as that number will enable you to compare it to other options. Let’s take a look at how much you could save on interest over the life of a 30-year, $200,000 loan with a 3.5% interest rate if you paid $50, $100 and $250 extra each month. Just paying an extra $50 per month will shave 2 years and 7 months off the loan and will save you over $12,000 in the long run. If you can up your payments by $250, the savings increase to over $40,000 while the loan term gets cut down by almost a third.The savings can be substantial. Use a mortgage calculator to figure out your estimated savings. Then, compare that to the savings or returns you can get by investing the same money elsewhere.Ways to prepay your mortgagePay more every monthThe first option is to analyze your budget and see if you can afford to increase the amount you pay on your mortgage each month. Even if you can only commit to $25 or $50, it can save you thousands over the course of the loan.Make an extra payment each year Another option is to make one extra payment each year that is equal to your normal payment amount. This can be a good option if you get a bonus or tax refund each year.Make a lump-sum paymentSometimes situations come about which leave people with a lump sum of money, like receiving an inheritance. While exciting, it can also be stressful because you want to use the money wisely. Using lump sums to pay down your mortgage helps to reduce your interest and increase equity faster, which is a helpful investment. It can also ensure that the money is invested rather than spent.Mix it up You can also use a combination of these approaches, such as paying a little bit more each month and then making a larger one-time payment when you can.

The right payment strategy for you will depend on your financial situation. For example, if your budget is tight and you can’t commit to paying more every month but have certain months when your income is higher, you can commit to making an extra payment during those months. Alternatively, if you don’t receive any income boosts throughout the year but have a little bit of disposable income each month, the monthly payment option will be a better fit.When not to pay extraPaying extra on your mortgage can be helpful but it isn’t always the best use of your money.“Whether you should pay extra on your mortgage or not depends on the rest of your financial picture. If you have credit card debt, an expensive car loan, or other high-interest debt, you’ll want to pay that down before making extra payments on your mortgage,” Matthew McEwan, VP of real estate development and property management firm Medallion Capital Group, said.“Additionally, if you are a savvy investor who can tolerate some risk, you may be able to achieve a higher rate of return by investing that money instead,” McEwan said.What to do before paying off your loan earlyBefore you pay off your mortgage early, there are a few things you should do. For one thing, you’ll want to meet all of your regular necessary expenses (rent, food, clothing, etc.). Next, ensure you pay off any debts you have with interest rates that are higher than the interest rate on your mortgage. For example, if you have a $5,000 balance on a credit card with an 18% APR and your mortgage has a 4% APR, you’ll save more by paying down the credit card first.It’s also recommended to make sure that you have an emergency savings account that is equal to at least three months of pay, and preferably six. Moreover, confirm that you and your dependents are enrolled in the insurance policies you need to protect yourselves in the future. This often includes health, property, auto, disability and life policies.

If you have an employer offer to match your retirement savings up to a certain percentage, max out the company contributions. The earlier you invest in retirement, the better.

C. Fair Credit Reporting Act

Explanation:

Fair Credit Reporting Act was brought into action to lay governance on the credit bureaus regarding their consumers' credit information. The act presents the rules and regulations to be followed to obtain and present the credit details of the consumers. Also, it looks over the manner in which the details are shared with the consumers and others for various other purposes.

According to the given excerpt, the Fair Credit Reporting Act allows Carlos to take an action in case of any error found in his credit report.