On March 1 of the current year, Spicer Corporation compiled information to prepa

Question

On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the company’s sales are made on account. The following information has been provided by Spicer’s management.

  

  

The company’s collection activity on credit sales historically has been as follows.

  

  

Spicer’s total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter.

  

Compute Spicer’s budgeted cash balance at the ends of March, April, and May.

Cash balance on March 31?

Cash balance on April 30?

Cash balance on May 31?

Month Credit Sales January $ 300,000 (actual) February 400,000 (actual) March 428,000 (estimated) April 805,000 (estimated) May 800,000 (estimated)

Explanation / Answer

1 Sales budget March April May Quarter Sales 428000 805000 800000 2033000 2 Budgeted Cash receipt March April May Quarter February sales 45000 45000 March sale 120000 60000 180000 April sales 214000 128400 64200 406600 May sales 402500 241500 644000 June sales 400000 400000 Total collection 379000 590900 705700 1675600 3 Cash budget March April May Quarter Beginning cash balance 5,00,000 4,79,000 6,69,900 5,00,000 Add Cash collections 379000 590900 705700 1675600 Total collections 8,79,000 10,69,900 13,75,600 21,75,600 Less Cash disbursements 400000 400000 400000 1200000 Ending cash balance 4,79,000 6,69,900 9,75,600 9,75,600

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.