Georges Pool Hall and Equipment anticipates its revenues and payments for Jan- M
ID: 2719665 • Letter: G
Question
Georges Pool Hall and Equipment anticipates its revenues and payments for Jan- May to be
Sales
Payments
January
$14,000
$18,000
February
$20,000
$21, 300
March
$26,000
$19,100
April
$22,000
$22,400
May
$18,000
$14,700
70 % of sales are on credit. 40% of accounts receivable are collected in the month after the sale and the balance is received in the second month after the sale. Prepare a schedule of cash receipts for March, April, and May. George pays it payments in the following month. George had a cash balance of $2,000 on March 1, which is the minimum required cash balance. There is a loan of $2,000 outstanding on March 1.
Prepare a cash budget for March, April, May
Sales
Payments
January
$14,000
$18,000
February
$20,000
$21, 300
March
$26,000
$19,100
April
$22,000
$22,400
May
$18,000
$14,700
Explanation / Answer
Cash Credit sales March 30% x 26000 $ 7,800 $ 18,200 April 30% x 22000 $ 6,600 $ 15,400 40% of credit sales from march $ 7,280 $ 13,880 May 30% of 18000 $ 5,400 60% of credit sales from March $ 10,920 40% of credit sales from April $ 6,160 $ 22,480 March April May Begining cash Balance $ 2,000 $ (9,500) $(14,720) Cash from operations $ 7,800 $ 13,880 $ 22,480 Total available cash $ 9,800 $ 4,380 $ 7,760 Less: Payments $ 21,300 $ 19,100 $ 22,400 Cash Balance $ (11,500) $ (14,720) $(14,640) Add: Loan $ 2,000 Ending cash Balance(Deficit) $ (9,500) $ (14,720) $(14,640)
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