On January 1, Easton Company had cash on hand of $115,000. All of January's $244,000 sales...
On January 1, Easton Company had cash on hand of $115,000. All of January's $244,000 sales were on account. December sales of $230,000 were also all on account. Experience has shown that Easton typically collects 30% of receivables in the month of the sale and the balance the following month. All materials and supplies are purchased on account and Easton has a history of paying for half of these purchases in the month of purchase and half the following month. Such purchases were $156,000 for December and $157,000 for January. All other expenses including wages are paid in the month incurred. These amounted to $42,000 in December and $64,000 in January. Use this information to determine the projected ending balance of cash on hand for January. (Round answer to the nearest whole dollar)
Homework Answers
Cash budget for January
| Beginning cash balance | 115,000 |
| Cash receipts from customers: | |
| - December sales (230,000 x 70%) | 161,000 |
| - January sales (244,000 x 30%) | 73,200 |
| Total available cash | 349,200 |
| Cash payments: | |
| Cash payment to suppliers | |
| - December purchases (156,000 x 1/2) | - 78,000 |
| - January purchases (157,000 x 1/2) | - 78,500 |
| Other expenses | - 64,000 |
| Ending cash balance | 128,700 |
Projected ending balance of cash on hand for January = $128,700
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