A company is negotiating with the bank for a $200,000/ 90 day/12% loan effective July 1 of the current year. If the bank grants the loan, the proceeds will be $194,000 which the company in tends to use on July 1 as follows: pay accounts payable$150,000; purchase equipment $160,000; add to bank balance$28,000. The current working capital position, according to financial statements as of June 30 as follows: cash in bank.......................................................................$20,000 receivables(net of allowance for doubt full accounts...........160,000 merchandise inventory....................................................... 90,000 total current assets............................................................$270,000 accounts payable(includes accrued operating expense)....150,000 working capital................................................................. $120,000
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