Bmgmt A Major Supplier To Blackberry

Q - 1Solutions:Total purchase by Blackberry per year =MM5% of company sales100% of company salesProfits from dealing Blackberry =Q - 2b. 2 / 15 Net 301.5 / 30 Net 40(a)a. 4 / 10 Net 50This credit term means that, 4% of discount on payment may be availed if paid with in 10 days , which is due in 50 days.Implied cost if the cash discount is not availed Effective annual rateImplied Cost * ( 365 / (difference between credit and the discount period))(b) 2 / 15 Net 30This credit term means that, 2% of discount on payment may be availed if paid with in 15 days , which is due in 30 days.(c)This credit term means that, 1 .5% of discount on payment may be availed if paid with in 30 days , which is due in 40 days.SalesLabor and Raw MaterialsJuneJulyAugustSeptemberOctoberNovemberDecemberCollections within the month of sales =Collections following month of salesCollections in the second of salesPayments for labor and rawmaterial incurren in next monthCash BudgetsReceiptsPaymentsMonth NameG&A SalariesLease paymentsMiscellaneous ChargesAssumptions:We have not considered the depreciation charges because there won't be any cash outflow because of the depreciation.Income Tax DuesProgress PaymentTotal ReceiptsTotal PaymentsNet Cash Gain (Loss)Plus Beginning CashLess: Minimum CashSurplus (Deficit)Sales