The beginning cash balance is $15,500. Sales are forecasted at $800,000 of which

Question

The beginning cash balance is $15,500. Sales are forecasted at $800,000 of which 80% will be on credit. 70% of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $475,000. Accounts Receivable from previous accounting periods totaling $8,600 will be collected in the current year. The company is required to make a $20,000 loan payment and an annual interest payment on the last day of every year. The loan balance as of the beginning of the year is $180,000, and the annual interest rate is 12%.

Instructions

Compute the excess of cash receipts over cash disbursements.

Explanation / Answer

Compute the excess of cash receipts over cash disbursement

Cash receipts Cash sales (800000*20%) 160000 Cash receipts from customer for month sale (800000*80%*70%) 448000 Cash receipt from previour account receivable 8600 616600 Total cash receipts Cash disbursement Cash expenditure 475000 Interest payment (180000*12%) 21600 Loan payment 20000 516600 Excess of cash receipt over disbursement 100000

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