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Walter Enterprises expects its September sales to be 30% higher than its August sales of $175,000....

Walter Enterprises expects its September sales to be 30% higher than its August sales of $175,000. Purchases were $125,000 in August and are expected to be $145,000 in September. All sales are on credit and are collected as follows: 40% in the month of the sale and 60% in the following month. Merchandise purchases are paid as follows: 30% in the month of purchase and 70% in the following month. The beginning cash balance on September 1 is $7,400. The ending cash balance on September 30 would be:

Multiple Choice

  • $72,400.

  • $159,900.

  • $65,000.

  • $89,900.

  • $24,900.

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Answer #1

The correct answer is $72400

Calculations

Ending cash balance = opening balance + collection from sales - payment for purchase

= 7400 + ((175000×60%)+(175000×1.3×40%)) - ((125000×70%)+(145000×30%))

=7400+196000 - 131000

= $72400

Answer $72400

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