Question

please correct the red

6. A corporation is preparing an analysis of cash inflows and cash outflows for January and February. The following data are relevant: December 5,000 January $10,000 $110,000 $100,000 February $15,000 $135,000 $130,000 Cash sales Credit sales $90,000 Operating expenses 70,060 The company collects 20% of its credit sales in the month of the sale and the remaining 80% in the month after the sale. Cash at the beginning of January is $100,000. This also represents the desired beginning balance for February. A dividend of $30,000 will be paid in February and a tax payment of $26,000 must be paid in January. The company can borrow a maximum of $52,000 on a line of credit. (a) Calculate the total cash avai lable, total payments, net cash flows, and credit line usage for January and February. January 100,000 February Beginning cash balance 100000 Cash sales 10,000 27,000 Collections, same month 22,000 72006 88000 Collections, last month 94010 230,00 Total cash January February 130,000 Operating expenses 30000 Dividends paid 24,000 9a000 Taxes paid (60,000 Total cash payments Net cash flows 70,000 Credit line usage 30,000 (b) Calculate the accounts receivable as of the end of February 5000 27,00 0 88,000 /30, 000

Answer 1

	January	February
Beginning cash balance	100,000	100,000
Cash sale	10,000	15,000
Collection, same month	22,000	27,000
Collection, last month	72,000	88,000
Total cash	204,000	230,000
Less:
Operating expense	100,000	130,000
Dividend paid	0	30,000
Tax paid	26,000	0
Net cashflows	78,000	70,000
Credit line usage	22,000	30,000

Account receivable at end of the february = 135,000 x 80% = 108,000