Adjust the Cash Balance

We obtain the following $2020$ forecasts of selected financial statement line items for Journey Company.

a$.$ Does forecasted cash deviate from the normal level for this company?

Calculate the company's normal cash level as a percentage of sales.

Normal cash as a $\%$ of sales

Using the answer above, compute what should be the normal cash balance for FY$2020.$

Normal cash balance for FY$2020$

$

b$.$ Is the deviation in part a large enough to require adjustment? Explain.

No$.$ The deviation is not large enough to require an adjustment.

Yes. The deviation is large enough to require an adjustment.