QUESTION 3 The Mason Corporation has a 30-day average collection period and wish
ID: 2769656 • Letter: Q
Question
QUESTION 3
The Mason Corporation has a 30-day average collection period and wishes to maintain a $5 million minimum cash balance. Based on this and the information below, answer Questions 3 - 5.
Mason Corporation
Cash Budget (in millions)
Q1
Q2
Q3
Q4
Beginning receivables
$120
Sales
90
120
150
120
Cash collections
Ending receivables
Total cash collections
Total cash disbursements
(80)
(160)
(180)
(160)
Net cash inflow
Beginning cash balance
$5
Net cash inflow
Ending cash balance
Minimum cash balance
Cumulative surplus (deficit)
What is the ending receivables in the second quarter (Q2)?
$80 million
$90 million
$60 million
$40 million
QUESTION 4
What is net cash inflow in the third quarter (Q3)?
-$20 million
$-40 million
-$50 million
-$60 million
QUESTION 5
What is the cumulative surplus (deficit) in the fourth quarter (Q4)?
-$40 million
$10 million
$-20 million
-$60 million
Mason Corporation
Cash Budget (in millions)
Q1
Q2
Q3
Q4
Beginning receivables
$120
Sales
90
120
150
120
Cash collections
Ending receivables
Total cash collections
Total cash disbursements
(80)
(160)
(180)
(160)
Net cash inflow
Beginning cash balance
$5
Net cash inflow
Ending cash balance
Minimum cash balance
Cumulative surplus (deficit)
Explanation / Answer
Mason Corporation Cash Budget Q1 Q2 Q3 Q4 Beginning Receivables 120 30 40 50 Sales 90 120 150 120 Cash Collections ( 120+90*2/3) 180 110 140 130 Ending Receivables 30 40 50 40 Total Cash Collections Total Cash Disbursements -80 -160 -180 -160 Net Cash Inflow 100 -50 -40 -30 Beginning Cash Balance 5 105 55 15 Net Cash Inflow 100 -50 -40 -30 Ending Cash Balance 105 55 15 -15 Minimum Cash Balance 5 5 5 5 Cumulative Surplus 100 50 10 -20 The Accounts Receivables for Q 2 is $ 40 Million The correct answer is d. $ 40 Million The Net Cash Inflow for Q3 50 Million The correct option is c. -50 Million Q4 cumulatie surplus is -20 Million The correct option is C. -20 Million
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