Question

The following information is provided for Molly Corporation: Estimated Sales: August $ 60,000 September 80,000 October 70,000 November 50,000 December 100,000 20% of sales are cash sales. Of the credit sales, 60% is collected in the month of sales, 30% in the month following the sale and 10% in the second month after the sale. Other information:  Purchases of inventory for October, November and December are $8,500, $10,000, and $17,500 respectively.  Operating expenses are $39,000 per month.  Equipment purchases in November, $17,000.  Dividends declared and paid in December, $26,000.  Cash Balance, October 1, $4,000 Chapter 22: Homework Question 3 (1 point) Required: Calculate the cash balance on October 31. When entering the answer in Blackboard, omit $ signs. Chapter 22: Homework Question 4 (1 point) Required: Calculate the cash balance on November 30. When entering the answer in Blackboard, omit $ signs. Chapter 22: Homework Question 5 (1 point) Required: Calculate the cash balance on December 31. When entering the answer in Blackboard, omit $. signs.

Answer 1

Schedule of cash collections
	Aug	Sep	Oct	Nov	Dec
Estimated sales	60,000	80,000	70,000	50,000	100,000
Cash sales	12,000	16,000	14,000	10,000	20,000
Credit Sales	48,000	64,000	56,000	40,000	80,000
Credit Sales Collection
60% in the month of sale	28,800	38,400	33,600	24,000	48,000
30% in following month		14,400	19,200	16,800	12,000
10% in second month			4,800	6,400	5,600
Total collections			71,600	57,200	85,600
Calculation of cash balance
	Oct	Nov	Dec
Beginning Balance	4,000	28,100	19,300
Cash collections	71,600	57,200	85,600
Total cash available	75,600	85,300	104,900
Cash disbursements:
Purchase of Inventory	8,500	10,000	17,500
Operating Expenses	39,000	39,000	39,000
Equipment Purchases		17,000
Dividends paid			26,000
Total disbursements	47,500	66,000	82,500
Ending cash balance	28,100	19,300	22,400

B C D E F 1 Schedule of cash collections 2 Aug Sep Oct Nov Dec 3 Estimated sales 60000 80000 70000 50000 100000 4 Cash sales =B3*20% =C3*20% =D3*20% =E3* 20% =F3*20% 5 Credit Sales =B3-B4 =C3-C4 =D3-D4 =E3-E4 =F3-F4 6 Credit Sales Collection 7 60% in the month of sale =B5*60% =C5*60% =D5*60% =E5*60% =F5*60% 8 30% in following month =B5*30% =C5*30% =D5*30% =E5*30% 9 10% in second month =B5*10% =C5*10% =D5*10% 10 Total collections =D4+SUM(D7:09) =E4+SUM(E7:E9) |=F4+SUM(F7:F9) 11 12 Calculation of cash balance 13 Oct Nov Dec 14 Beginning Balance 4000 =B23 =C23 15 Cash collections =D10 =E10 =F10 16 Total cash available =SUM(B14:B15) =SUM(C14:C15) =SUM(D14:D15) 17 Cash disbursements: 18 Purchase of Inventory 8500 10000 17500 19 Operating Expenses 39000 39000 39000 20 Equipment Purchases 17000 21 Dividends paid 26000 22 Total disbursements =SUM(B18:321) =SUM(C18:C21) =SUM(D18:D21) 23 Ending cash balance =B16-B22 =C16-C22 =D16-D22