Bella , Inc. has estimated current year sales (in millions) for the next four qu

Question

Bella

, Inc. has estimated current year sales (in millions) for the next four quarters.

Q1 $240

Q2 $250

Q3 $205

Q4 $350

Sales for the 1

st

quarter next year are projected to be $230.

Accounts Receivable at the beginning of the y

ear was $100.

Beginning Accounts Payable were $60.

The beginning cash balance is $50.

Hoyt, Inc. cash collection schedule is as follows: 60% of sales in the current quarter,

40% in the 1

st

quarter after sale.

Purchases from suppliers in a quarter are equal

to 50% of the next quarter

Explanation / Answer

Collection of accounts = 0.6 * current sales + 04 * previous quater sales

payment of accounts = 0.5 * [0.5 * current sales + 0.5 * next quater sales]

Q1 Q2 Q3 Q4 Q1(next year) Sales 240 250 205 350 230 Beginning receivables 100 96 100 82 sales 240 250 205 350 collection of accounts 244 246 223 292 ending receivables 96 100 82 140 payment of accounts 122.5 113.75 138.75 145 wages,taxes and expenses 48 50 41 70 total cash disbursements 170.5 163.75 179.75 215 Total cash collections 244 246 223 292 total cash disbursements 170.5 163.75 179.75 215 net cash inflow 73.5 82.25 43.25 77 Cash Budget Q1 Q2 Q3 Q4 Beginning cash balance 50 123.5 205.75 249 Net cash inflow 73.5 82.25 43.25 77 Ending cash balance 123.5 205.75 249 326 Minimum cash balance -30 -30 -30 -30 Cumulative surplus(deficit) 93.5 175.75 219 296

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