Company\'s budgeted income statement reflects the following amounts Sales 120,0

Question

Company's budgeted income statement reflects the following amounts Sales 120,0 24.00 24,20 27,00 28,00 January 78,000 00.000 81.250 84,500 Februar 110.00 125,0 130.0 April at the end of the year Morgan pays for an purchases in the month following purchase and takes advantage of. 3% discount. The following balances are as of January 1 88.0 8.0 72.0 Cash Accounts receivable* Acoounts payable Of this balance$36,000 will be collected in January and the remaining amount will be ollected in Februay The monthly expense figures indlude 55,000 of depreciation The expeses are paid in the month inaued Morgan's expected cash balanoe at the end ot February is $92.000 5113.300 $87,000 589,180 594.100

Explanation / Answer

Calculation of expected cash collection for January and February January February Accounts Receivables Jan.1 $35,000.00 $23,000.00 January Sales Collection $60,000.00 $36,000.00 February Sales Collection $55,000.00 Total Cash Collection $95,000.00 $114,000.00 Calculation of Purchases Payments January February Accounts Payable $69,840.00 January Purchases $75,660.00 Total Purchases Payments $69,840.00 $75,660.00 Calculation of Morgan's Expected cash balance at the end of February January February Beginning Cash balance $88,000 $94,160 Add : Cash Collections $95,000 $114,000 Total Cash Available $183,000 $208,160 Cash Payments Purchases $69,840 $75,660 Expenses $19,000 $19,200 Total Cash Payments $88,840 $94,860 Ending Cash balance $94,160 $113,300 Morgan's Expected cash balance at the end of February = $1,13,300

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