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 company's
On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the company's sales are made on account. The following information has been provided by Spicer's management: |
Month | Credit Sales | ||
Jan. | $ | 300,000 | (actual) |
Feb. |
| 400,000 | (actual) |
Mar. |
| 667,000 | (estimated) |
Apr. |
| 855,000 | (estimated) |
May |
| 800,000 | (estimated) |
|
The company's collection activity on credit sales historically has been as follows: |
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Collections in the month of the sale | 50 | % |
Collections one month after the sale | 30 |
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Collections two months after the sale | 15 |
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Uncollectible accounts | 5 |
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Spicer's 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 Spicer's budgeted cash balance at the ends of March, April, and May. |
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