Purchases Sales Month $39,500 $69,000 January 47,200 65,900 February 37,500 61,200 March 55,000 79,850 April 59,500...
|
Purchases |
Sales |
Month |
|
$39,500 |
$69,000 |
January |
|
47,200 |
65,900 |
February |
|
37,500 |
61,200 |
March |
|
55,000 |
79,850 |
April |
|
59,500 |
66,100 |
May |
Collections from customers are normally 65% in the month of sale, 22% in the month following the sale, and 11% in the second month following the sale. It is expected that the balance be uncollectible. Fonsey pays for purchases in the month following the purchase. Cash disbursements for expenses other than merchandise purchases are expected to be $13,300 for May. Fonsey's cash balance on May 1 was $21,500. Compute the expected cash balance on May 31.
Homework Answers
Computation of expected cash balance on May 31:
Cash balance as on May 1 = $21,500
Add: Collections from customers
- For May sales (66100*65/100) = 42965
- For April sales (79850*22/100) = 17567
- For March sales (61200*11/100) = 6732
Total collections from customers = $67,264
Less: Payment for purchases of April = $55,000
Less: Payments for other expenses = $13,300
Expected cash balance as on May 31 = $20,464.
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Purchases
Sales
Month
$39,500
$69,000
January
47,200
65,900
February
37,500
61,200
March
55,000
79,850
April
59,500...
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