Question
On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the companys
On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the companys sales are made on account. The following information has been provided by Spicers management.
Month | Credit Sales | ||
January | $ | 300,000 | (actual) |
February | 400,000 | (actual) | |
March | 414,000 | (estimated) | |
April | 865,000 | (estimated) | |
May | 800,000 | (estimated) | |
The companys collection activity on credit sales historically has been as follows.
Collections in the month of the sale | 50 | % |
Collections one month after the sale | 30 | |
Collections two months after the sale | 15 | |
Uncollectible accounts | 5 | |
Spicers total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter.
Compute Spicers budgeted cash balance at the ends of March, April, and May.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started