Question
Question 2 (Total: 50 marks) Fonsey Corporation, a merchandising company, has provided the following budget data: Purchases Sales Month $39,500 $69,000 January 47,200 65,900 February
Question 2 (Total: 50 marks)
Fonsey Corporation, a merchandising company, has provided the following budget data:
Purchases | Sales | Month |
$39,500 | $69,000 | January |
47,200 | 65,900 | February |
37,500 | 61,200 | March |
54,000 | 79,850 | April |
59,500 | 72,600 | May |
Collections from customers are normally 63% in the month of sale, 20% in the month following the sale, and 14% in the second month following the sale. It is expected that the balance be uncollectible. Fonsey pays for purchases in the month following the purchase. Cash disbursements for expenses other than merchandise purchases are expected to be $13,500 for May. Fonsey's cash balance on May 1 was $24,500.
Required:
- Compute the expected cash collections during May.
- Compute the expected cash balance on May 31.
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