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 January February Credit Sales $ 300,000 (actual) 400,000 (actual) 569,000 (estimated) 718,000 (estimated) 800,000 (estimated) The company's collection activity on credit sales historically has been as follows: Collections in the month of the sale Collections one month after the sale Collections two months after the sale Uncollectible accounts March April May 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. Required: Compute Spicer's budgeted cash balance at the ends of March, April, and May. Beginning Cash Collections on January Sales Collections on February Sales Collections on March Sales Collections on April Sales Collections on May Sales Total Cash Available Less: Expenditures Ending Cash Balance 50% 30 15 5 $ March 0 $ April 0 $ May 0

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 January February Credit Sales $ 300,000 (actual) 400,000 (actual) 569,000 (estimated) 718,000 (estimated) 800,000 (estimated) The company's collection activity on credit sales historically has been as follows: Collections in the month of the sale Collections one month after the sale Collections two months after the sale Uncollectible accounts March April May 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. Required: Compute Spicer's budgeted cash balance at the ends of March, April, and May. Beginning Cash Collections on January Sales Collections on February Sales Collections on March Sales Collections on April Sales Collections on May Sales Total Cash Available Less: Expenditures Ending Cash Balance 50% 30 15 5 $ March 0 $ April 0 $ May 0

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 4P

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