Question: A company is preparing its cash budget for the coming month. All sales

Question

Question: A company is preparing its cash budget for the coming month. All sales are made on account. Given the following:
                                            Beginning Balance      Budgeted Amounts
cash           $50,000                               ?

accts recievable                        180,000                             -

Sales                                        -                                800,000

Cash disbursements                -                           780,000

Depreciation                              -                                  25,000

Ending accts rec. balance               -                                  210,000

What is the expected cash balance of the company at the end of the coming month?

The answer is $40,000, but how do you get to that answer???

Explanation / Answer

Opening Cash Balance                             $50,000
Add : Cash Collected from
         accounts receivables

         Opening A/R   $180,000
        + Sales            $800,000
                               $980,000
         - Ending A/R $210,000                $770,000  
           Total Cash Inflow                     $820,000
Less : Cash disbursements                    $780,000  
Ending Cash balance                             $40,000
                                                         ===========

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