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 Sale January$300,000 (actual) February 400,000 (actual) March April May 719,000 (estimated) 684,000 (estimated) 800,000 (estimated) The company's collection activity on credit sales historically has been as follows. Collections in the month of the sale Collections one month after the sale Collections two months after the sale Uncolleotible accountr 508 30 15 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

Explanation / Answer

Cash Budget for March , April and May March April May Beginning cash balance $500,000.00 $624,500.00 $842,200.00 Sales Collection $524,500.00 $617,700.00 $713,050.00 Total Cash Available $1,024,500.00 $1,242,200.00 $1,555,250.00 Less : Cash Payments $400,000.00 $400,000.00 $400,000.00 Ending Cash balance $624,500.00 $842,200.00 $1,155,250.00 Collection from sales March April May January sales $45,000.00 February Sales $120,000.00 $60,000.00 March Sales $359,500.00 $215,700.00 $107,850.00 April sales $342,000.00 $205,200.00 May sales $400,000.00 Total sales Collection $524,500.00 $617,700.00 $713,050.00

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